Using Nigeria’s oil to diversify the national economy

Egypt’s Gas Production

Over the past two week we have featured a number of articles relating to oil and gas prospects and production across Africa. We now turn our attention to the country of Egypt.

Development of the natural gas industry

Egypt’s oil production has been in decline for almost two decades; however this has been offset by the development of the natural gas industry. In fact, natural gas production
 has increased fivefold since the mid-1990s.

Up to around 2004, gas production had increased by just enough to cater for rising consumption levels. Between 2005 and 2006 there was a surge in production, contributing to significantly higher hydrocarbon exports and growth of the region’s GDP.

A key driver of growth

Natural gas has become the key driver
of growth in Egypt’s energy sector, with several new wells being discovered in recent years. During 2000-09, natural
 gas production increased by an average of 14.5% per annum.

There was, however, a decline in 2010-11 due to a decision
 by the government at the end of 2008 to enact a two-year moratorium on new gas export deals. This decision was taken due to the fact that international gas prices were low at that stage.

Another factor may have been the numerous terrorist attacks on Egyptian- Israeli gas pipelines, which would have caused production
to decline. According to the EIA, BG Group accounts for around 40% of Egypt’s total gas production. BP accounts for another 22% of total gas production, but following recent discoveries in the Gulf of Suez and in the Mediterranean; it is expected to increase its output over the next few years. Eni is another major gas producer and operates in the Nile Delta and the Mediterranean.

Looking ahead

Egypt’s natural gas production is likely
to expand in the medium-term, with the country potentially becoming an important supplier of gas to Europe.

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David Okwara

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