Egypt forecasts gas shortages in the next fiscal year

The Egyptian government estimates that the energy crisis in Egypt is likely to worsen in the next fiscal year, as gas production fails to meet the growing domestic demand.

The Ministry of Petroleum expects daily gas production to reach 5.4 billion cubic feet, with daily gas consumption rising to 5.57 billion cubic feet during the fiscal year that starts on the first of July.

A source in the ministry said that gas production in the current fiscal year is still expected to exceed consumption, producing 5.31 billion cubic feet per day while daily consumption is 4.95 billion cubic feet.

However, the current army-backed interim government is facing the likelihood of further fuel shortages and power cuts.

Last week, Minister of Trade and Industry Monuir Fakhry Abd El-Nour said that domestic supplies of oil and gas were “insufficient to cover the needs of the Egyptian industry and household consumption”.

The growing Egyptian population of 85 million, along with generous subsidies, have led to a continuous growth in Egypt’s demand for energy, which has caused a slight reduction of liquefied natural gas (LNG) exports. Current LNG exports are not living up to the levels that had been previously agreed upon with foreign companies.

Egypt has two stations in Damietta and Idko for the liquefaction of natural gas, which is then transferred for export by ship; the country also has a pipeline for the transfer of LNG.

The production of the Idko station, operated by BG Group, decreased steadily over the past year. Also the Damietta station, run by Fenosoa, has been idle since 2012.

What adds insult to injury is that the companies have not developed any untapped discoveries in Egypt’s gas-rich waters because what the government pays them barely covers the cost of their investments.

In November, officials said that the government is holding talks to amend the prices paid for the purchase of gas from foreign companies.

In 2012, a $250 million project was launched in order to establish a floating port to import LNG to support the supply of gas in Egypt and ease the fuel shortages.

But confusion over the project’s terms, and which government body would be responsible for overseeing it, caused the cancellation of many bids to become floating terminal supplier. The government has not picked a provider until now.