The Ministry of International Cooperation held on Sunday a multi-stakeholder platform (MSP) titled ‘Egypt as an Energy Hub: Reforms and Prospects in the Petroleum and Gas Sector’.
The meeting was held in the presence of Minister of Petroleum and Mineral Resources Tarek El-Molla, and officials from major foreign and private companies operating in Egypt, including Apache Egypt, TAQA Arabia, Schlumberger, and SAP.
This is in addition to multilateral and bilateral development partners such as the World Bank Group (WBG), International Finance Corporation (IFC), the African Development Bank (AfDB), and the Germany Embassy, among others.
This comes as part of a series of interactive meetings organised by the Ministry of International Cooperation within the framework of the MSP.
The platform aims to create interaction and integration between government entities, multilateral and bilateral development partners, private sector, and civil society to implement Egypt’s 2030 Vision.
During the meeting, Minister of International Cooperation Rania Al-Mashat affirmed that the MSP aims to shed light on the economic sectors that have undergone radical reforms over the past years, which has contributed to enhanced economic development and opened new horizons for private sector participation.
She pointed out that the petroleum sector is one of the most critical sectors, as the government of Egypt announced its intention to transform the country into a regional energy center that would further enhance its leadership across many fields.
“The ministry aims to achieve this through several steps, namely exploring opportunities for cooperation in projects that the Ministry of Petroleum and Mineral Resources offers to international partners, highlighting areas that allow for private sector participation; identifying areas of participation in the short, medium, and long term; and creating integration between various multilateral and bilateral development partners,” said Al-Mashat.
Al-Mashat emphasised that although the petroleum sector acquired only 5 percent of the total ongoing development cooperation portfolio of the Ministry of International Cooperation, the story of development and reforms implemented over the years is a story that needs to be told.
“This is a story that reflects the commitment of the government of Egypt in moving forward with development plans and reforms across sectors, despite the circumstances posed by the COVID-19 pandemic,” Al-Mashat explained.
On his side, Minister El-Molla expressed that the petroleum sector continues to implement its integrated vision for the development and modernisation of the oil, gas, and mining sectors.
He added that the overall aim is to unlock the potential within the framework of the country’s 2030 vision for sustainable development and increase investment as a result of the positive economic reform programme implemented by the government.
El-Molla elaborated that Egypt’s petroleum modernisation plan consists of 3 strategic pillars: energy security, financial sustainability, and sector governance.
These pillars have contributed and led to many successes, such as signing 98 agreements with international companies that aim to drill for oil and gas worth $16 billion. The new strategy has lured in new international entities to work in the Egyptian petroleum sector, and this reflects confidence in the sector, according to El-Molla.
He pointed out that this sector has progressed from 11 percent negative growth in 2015 to 25 percent positive growth in 2020.
“This came about via Egypt’s achievement of self-sufficiency in gas, and in providing a surplus for exporting; through the expansion of the liquefied natural gas process in Damietta and Edku situated on the Mediterranean Coast, and the establishment of the Gas Regulatory Authority to regulate activities of the gas market,” he explained.
This has allowed for the entry and participation of private companies in the Egyptian gas system and in paying 80 percent of the dues of foreign companies operating in the country, according to El-Molla.
El-Molla indicated that the oil and gas sector amounted to 24 percent of Egypt’s GDP in FY2019/2020, and the sector’s total investments from FY2014/2015 to FY2019/2020 amounted to $74 billion.
The minister also noted that 6 million more homes were added to the 11.8 million homes that have natural gas, explaining that the refining industry is witnessing the implementation of a plan to develop and modernise old refineries and establish new refineries that comply with European standards and specifications.
“This has contributed to reducing gasoline and diesel imports by 35% and the overall goal is to achieve self-sufficiency in petroleum products by 2023,” said the minister.
Marina Wes — the World Bank’s country director for Egypt, Yemen, and Djibouti — said that the way policy reform has helped leverage private sector engagement leaves her optimistic about the potential progress in Egypt going forward.
“The reforms outlined today were challenging to implement, yet Egypt was successful in its executional framework, leading to a sustainable development of the oil sector’s value chain,” she added.
She explained that the improvement of petroleum and gas production promotes economic and social development by contributing to economic growth and job creation.
Moreover, the sustainable development of the sector is important for the promotion of affordable and clean energy by adopting sustainable production practices and infrastructure, according to Wes.
David Chi, vice president of Apache Corporation and General Manager for Apache Egypt, said that the company has been Egypt’s partner for 25 years, investing over $20 billion in the country.
He added that Egypt is in a great place in terms of resources, location, and leadership, which makes it a regional hub for foreign investments in the energy sector.
In 2020, the Ministry of International Cooperation secured $9.8 billion in development financing; of which $6.7 billion were secured for financing sovereign projects and $3.1 billion for the private sector.