Egypt aims for petroleum self-sufficiency

Egypt’s Minister of Petroleum and Mineral Resources, Tarek El Molla, said that Egypt will reach self-sufficiency in oil products by 2023, benefiting from its new development projects in the oil sector. Molla’s remarks were made on the sidelines of the climate summit in Riyadh.

He added that Egypt will upgrade its existing refineries and build seven new ones as part of a $7 billion project. The new facilities will be able to produce 6.2 million tons of oil products such as gasoline and diesel per year.

“We are not a large oil producer, but we are doing well with refined products. Instead of importing refined products, we prefer importing crude oil and refining it locally,” he said.

Egypt is seeking to become a major hub for exporting gas to Europe, where demand is rising as governments shift from more polluting fossil fuels like coal and oil to cleaner energy sources like gas.

Molla noted that with liquefied natural gas exports growing again, Egypt plans to negotiate more long-term sales deals with customers and to become less reliant on the spot market. He added that his country currently sells about 60% of LNG through long-term contracts and 40% based on immediate delivery.

In parallel, Egypt announced in a Facebook post on Oct. 25 that the Italian company ENI made three oil and gas discoveries in Meleiha and southwest Meleiha concessions in the Western Desert.

The ministry indicated that ENI identified oil and gas deposits following the drilling of the Jasmine W-1X and MWD-21 wells. The Jasmine W-1X is located 5 kilometers west of Jasmine field. Tests pointed to a production rate of 2,000 barrels of light oil per day and 7 million cubic feet of associated gas per day.

The ministry’s statement revealed that the MWD-21 well is already producing at a stable rate of 2,500 barrels of crude oil per day.

ENI made another discovery in the South West Meleiha exploration concession through the SWM-4X well, located 35 km south from the Meleiha field, the ministry said, with a production rate of about 1,500 barrels of oil equivalent per day.

The total proved reserves associated with these discoveries are 50 million barrels of oil, and the new discoveries add more than 6,000 barrels of equivalent oil per day, the ministry said.

Former Petroleum Minister Osama Kamal told Al-Monitor by phone that achieving self-sufficiency in oil products depends on several factors, mainly reducing petroleum consumption. Kamal noted that Egypt imports approximately 35% to 40% of its oil derivatives, and this percentage is likely to increase unless cleaner alternatives are used.

Kamal said that the proposed alternatives include switching to other types of fuel and other power generation systems. Power plants consume 35-37 million tons of fuel annually, out of a total 80 million tons in Egypt, he said, and “Therefore, it is necessary to increase power generation using solar energy.”

Using more gas in the transport sector and households, Kamal said, will reduce pressure on oil derivatives, reduce the burden on the state budget, help the environment and reduce pollution rates. Implementing this strategy, while speeding the current refinery projects, will qualify Egypt to do without imports, he said.

On the other hand, Mohamed Saad Eldin, the head of the Gas Investors Association and the head of the Energy Committee at the Federation of Egyptian Industries, believes that Egypt currently has a surplus of natural gas production. 

He explained that increasing the use of gas in all sectors as much as possible, and increasing the production of oil derivatives through new refining projects, will help achieve self-sufficiency  in 2022-2023. This two-pronged approach will also benefit the environment.

Even though the use of gas in all sectors has increased, Eldin said, some sectors will continue to consume oil derivatives, so it is necessary to increase the production of gasoline, diesel, and butane gas locally, and this is what the ministry is currently doing in its race to complete the implementation of new refining projects.