Egypt has a problem that’s rare among high volume African gas producers. It has created so much incentive for domestic gas use that, affected by its own success, it has headed on a slippery road to natural gas import.
In spite of holding close to 80Trillion cubic feet of gas reserves, the fourth largest store on the continent, Egypt, by most recent accounts, is so desperate for gas supplies that it already sees itself as a gas importer.
Just yesterday(November 22, 2012), Cairo based Citadel Capital, said it had signed an agreement with Qatari investors to import liquefied natural gas into North Africa’s largest economy.
The agreement is happening two weeks after the Egyptian government itself declared that it would allow liquefied natural gas imports after gas shortages contributed to countrywide power cuts.
On a government to government level, the Ministry of Petroleum and Natural Resources has concluded a deal with Algeria to import approximately 500 million cubic feet of gas daily from Algeria, starting in May 2013.
The details of these transactions are still quite sketchy. For one, the Citadel statement didn’t indicate any regasification plans. And with regards to the import from Algeria, it wasn’t immediately clear whether this needed a pipeline construction or if there was already a transport route.
Egypt approached Algeria for import to meet its own export contractual agreements amidst a rise in domestic demand. Gas to Power, Industrial consumption, motor vehicles using gas as well as household usage were responsible for consumption of1.65 Trillion standard cubic feet of gas around the country in 2010/2011 year, according to EGAS, the state gas company. It is expected to rise. Currently, Egypt has three liquefied natural gas (LNG) plants and a pipeline to export gas. The LNG Plants include Segas LNG Train 1 in Damietta and Egypt LNG trains 1 and 2 in Idku. Their combined export capacity is close to 600Bcf a year. But in 2010, as domestic demand increased, LNG exports fell to about 354bcf, which was down by 30% from almost 500bcf in 2009. The government has been using some of the gas destined for exportation to the local market to bridge the energy deficit, which resulted in rolling blackouts in second and third quarters of 2012.