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Lacking Energy: Egypt's economic crisis

Government estimates forecast Egypt's energy crisis will worsen in the next fiscal year with the failure of gas production to accommodate the growing domestic demand, Reuters news agency reported Monday.

According to the Ministry of Petroleum, gas production will be 5.4 billion cubic feet (bcf) per day versus 5.57bcf per day consumption in the next fiscal year.

In the current fiscal year, gas production is still estimated to exceed consumption at 5.31bcf per day versus 4.95bcf per day, a ministry source told Reuters.

Meanwhile, the Wall Street Journal (WSJ) said allowing private-sector firms to import natural gas won't resolve Egypt's energy crisis.

"The North African country, which was once a gas exporter to markets from Asia to South America, was pushed to become an importer for the first time last year after failing to keep pace with its demand growth. It has in the past guaranteed subsidised energy supplies to the private sector, while exporting about a quarter of its gas output," Summer Said of the WSJ said.

Following the July 3 military coup, Egypt froze talks with Qatar over liquefied natural gas (LNG) imports. Due to the continued political unrest since the coup, Egypt has delayed building a LNG import terminal and its attempts to appeal to foreign investors have failed. Companies want to get out of the country because of the worsening political situation, a former senior official at the state-run Egyptian Natural Gas Holding Co. told the WSJ.

"So if the government does not wake up and find a serious solution for both its energy sector and its energy-intensive factories, you will have local companies going out of business because they cannot be cost effective and international energy firms running away because they are not making profit," he added.

Source: Wall Street Journal & Reuters

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