Egyptian oil, gas and petrochemicals

Oil and gas

BMI has said that as political stability returns to Egypt, investor sentiment has improved. The government is also beginning to repay oil companies across the country. BMI forecasts an upside for investment and production in natural gas projects, however, the company has noted that fuel subsidies are continuing to disincentivise investment in the downstream sector.

First gas has been announced from BP’s DEKA project in Egypt, at a rate of 0.5 billion m3 which is expected to climb to 2.3 billion m3 by the middle of next year. BMI has said however, that although gas production is anticipated to grow in the country from 58.33 billion m3 to 74.77 billion m2 between now and 2023, consumption will outpace and increase from 58.33 billion m3 to 77.72 billion m3. BMI has also reported that in Egypt’s gas market, a Memorandum of Understanding has been signed for the five year chart of a floating storage and regasification unit between EGAS and Hoegh LNG. There is also the potential restart of LNG exports following talks between the owners of Israeli gas fields and tow LNG terminal operators in Egypt.

When it comes to fuel, price reforms which were implemented in July are expected to temper demand for gasoline, diesel and industrial volume natural gas. BMI has said that this will also improve the government’s budget balance and enable the government to repay international oil companies. The volume of fuel consumption has however been downgraded from 2015 to reflect the implementation of fuel subsidies.

Of Egypt’s refining sector, BMI has said that it will remain low tech and inefficient however the US$ 12.5 billion worth of government inspection that is expected could see the Mostorod and Midor facilities expand and upgrade their refining facilities.

Petrochemicals

It has been said by BMI that the expansion of the petrochemicals sector in Egypt is likely to go ahead, however, delays are expected. BMI has also said that greater political stability should bring more clarity to the business environment along with reduced risk over the medium term. Egypt’s Minister of Petroleum has however been reported as saying that in the second quarter of this year, the completion of several petrochemical projects in the country were delayed due to the paucity of natural gas supplies. Domestic petrochemical projects that have been postponed include US$ 2.2 billion complex. Projects that have been delayed until the first quarter of next year include US$ 408 million polystyrene complex and a US$ 1.6 billion ethylene and derivative project. BMI does however already anticipate the likelihood of feedstock restrictions which are likely to cause project delays and these have been built in to all forecasts by the company.

BMI expects a modest turnaround in real GDP growth in Egypt and a baseline economy expansion of 3.1% in the financial year.

Edited from report briefs by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/11112014/bmi-oil-gas-petchem-in-egypt/