February 19, 2014
By Ola Galal
CAIRO: Egypt, the Arab world’s most populous nation, is poised to get its first cargo of imported liquefied natural gas before summer to help meet rising demand as local production slumps, Oil Minister Sherif Ismail said.
State-run Egyptian Natural Gas Holding Co. is in the “final stage” of reviewing three offers for rental of a regasification unit that would permit LNG imports, he said Tuesday in an interview in Cairo. The government aims “to secure a reasonable number of cargoes” this year, Ismail said, without giving further details.
“We are also looking at scheduling LNG imports for 2015 and 2016 for a period between three and five years because we believe that Egypt has big proven and potential natural-gas reserves,” the minister said. “So we will be only needing that imported gas until we bridge the gap between production and consumption.”
Local energy exploration and production slowed in the three years since an uprising toppled Hosni Mubarak from the presidency. Debts to foreign oil companies increased to $4.8 billion by the end of 2013, according to Ismail.
Egypt is producing 5.1 billion cubic feet of natural gas daily, the minister said. That compares with 6.4 billion cubic feet in 2010. Output will expand to 5.8 billion cubic feet a day with additions from new and existing fields, he said.
“We are focusing on all the fields and wells that we could put on stream this year and expedite production from others that are already producing,” Ismail added.
The government is considering importing Iraqi natural gas through a pipeline used by Egypt to deliver the fuel to Jordan, he said. It’s also in talks with Reading, England-based BG Group PLC over gas supplies after the company declared force majeure on its Egyptian LNG exports, according to the minister.
Force majeure is a legal clause freeing companies from contract terms because of circumstances beyond their control. BG, which gets about 18 percent of its production from Egypt, made the declaration on Jan. 27 after gas was diverted to the domestic market from export terminals.
Costs for fuel subsidies are set to increase to 140 billion Egyptian pounds ($20 billion) in the fiscal year through June from 128 billion pounds in the prior period, Ismail said. Egypt will receive $2 billion from the United Arab Emirates in oil-product aid in the three months to March, the minister said.
Egypt has yet to announce the winner of a tender to import LNG for the power industry that closed on March 24, 2013. The delay stems from elevated prices that resulted from a supply shortage on the global market, Ismail said.
A version of this article appeared in the print edition of The Daily Star on February 19, 2014, on page 5.
Read more: http://www.dailystar.com.lb/Business/Middle-East/2014/Feb-19/247749-egypt-set-to-receive-first-lng-cargo-before-summer.ashx#ixzz2ttmMFYvg
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