Why don’t gas exports improve the Egyptian economy?

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The statistics of the Egyptian Ministry of Petroleum indicated that there had been considerable leaps in Egypt’s exports of natural gas during the past periods. Despite this, the general economic situation continued to deteriorate, and the cash reserve at the Central Bank of Egypt continued to decline. So why do these exports not contribute to saving Egypt from its economic disaster?

The Egyptian Ministry of Petroleum indicated in a previous statement that the value of Egypt’s exports of natural gas increased during 2021 by 768.2% compared to 2020, to reach $3.959 billion, compared to only $456 million, to jump again during the first four months of 2022. By 98%, it was compared to the same period of the previous year, recording about $3.892 billion. The Egyptian Minister of Petroleum, Tarek El Molla, said that Egypt’s exports of natural and liquefied gas are expected to continue to rise in the coming months, boosted by the entry of 33 wells on the production map, which will add 450 million cubic feet of gas and 17.2 thousand barrels of condensate, and also contributed to the growth of Those figures are rising gas prices resulting from the energy crisis that followed the Russian invasion of Ukraine.

In addition to this, Egypt, Israel, and the European Union signed, in mid-June, an agreement to export gas to Europe in an attempt to find alternatives to Russian fuel in light of the ongoing war in Ukraine, as the deal aims to transfer natural gas from Israel to Europe after liquefying it in stations. Egyptian. However, the data of the Central Bank of Egypt indicate a successive decrease in the cash reserve during the past months, as it reached 33.375 billion dollars at the end of June 2022, compared to 35.495 billion dollars at the end of May, a decrease compared to two billion dollars, while it had reached the end of April about 37.13 billion dollars with a reduction of 1.63 billion dollars.

Economic researcher Ali Gamal explains this paradox, saying that Egypt did not achieve self-sufficiency in natural gas until 2018, after the discovery of the Zohr field, whose reserves are estimated at 30 trillion cubic feet, knowing that the Italian company Eni owns the largest share of it, which means transferring its profits to abroad in foreign currency. “Egypt’s total production is about 66 billion cubic meters of natural gas, locally consuming more than 62 billion, and the rest for export, which is a small amount as the figures show.”

According to OPEC, Egypt’s gas exports during the first quarter of 2022 amounted to less than 2 million tons. Gamal adds that this exported quantity, of which Egypt owns a very diluted share, in addition to the fact that the rest of the amount exported is originally imported quantities from the Eastern Mediterranean Alliance that were liquefied in Egyptian stations and then re-exported, so what Egypt gains is its share in the liquefaction process in addition to fees Transit only. It is noteworthy that Egypt owns two big gas liquefaction plants, but their percentage is weak. The first is the Idku plant, with a capacity of 4.1 million tons per year, of which 71% is acquired by Shell (multinational) and Malaysian Petronas. At the same time, the Egyptian government’s share is 24% and 5% for the company Angie French. The second station in Damietta, which was opened in 2021, is owned by 40% of the Spanish company UFG, 40% of the Italian company Eni, 10% of the Egyptian Natural Gas Holding Company (EGAS), and 10% of the Egyptian General Petroleum Corporation. The gas network fees are $0.41 per million British thermal units – equivalent to approximately 28.6 cubic meters.