Egypt is preparing itself for a new era of natural gas-driven prosperity, writes Sherine Nasr Egypt's natural gas industry is growing rapidly and will soon be a major contributor to the country's economy. Not only are Egypt's reserves of natural gas (estimated at 58.5 billion cubic feet) the highest in the region but Egyptian natural gas is also believed to be of an exceptionally high quality. This was the verdict of experts at the First International Conference and Exhibition for Gas Technology last week. "In fact there are other factors that can help Egypt play a dominant role. In addition to potential reserves, which put Egypt at the forefront as a gas supplier, one must also consider Egypt's unique geographical location, which makes it an excellent potential supplier of gas to Europe," said Ibrahim Ahmed, assistant vice- chairman of the Egyptian Natural Gas Holding Company (EGAS). In fact, it was not until the early 1990s that Egypt started to encourage natural gas production. "Without natural gas production, Egypt would have imported petroleum to cover its growing needs," said Mohamed Farghali, vice- president of British Petroleum Egypt. Over the past ten years, a shift from oil to gas has been noticeable. Today, 90 per cent of the Egyptian power industry operates using natural gas, saving more of the nation's oil for export. Farghali added that Egypt's gas business is growing by five per cent per annum. "There are many concession areas with potential gas reserves yet to be exploited," he said. Egypt has four types of gas reserves which are classified according to their abundance and depth. "So far, Egypt has discovered most of its shallow gas reserves in win-to-win situations between the government and international companies. This has helped the gas market to grow rapidly," said Farghali. "In the future, most of the gas that will need to be developed is deep underwater," he added. Natural gas represents 25 per cent of total energy consumed worldwide. "Global demand for gas will grow 50 per cent faster than oil over the coming ten years, making natural gas the standard source of energy for the future," Farghali said. According to international statistics, global demand for gas is now estimated to be 120 million tonnes annually and is expected to jump to 230 million tonnes over the next eight years. Meanwhile, European demand for gas is increasing by three per cent annually. Egypt has the opportunity to capitalise on this growth in demand, said Ahmed. At present, Egypt has two gas hubs in Damietta and Idku, with two major Liquefied Natural Gas (LNG) projects in each. The Idku project, located 50km east of Alexandria, was initiated in 2001 with five shareholders, both Egyptian and foreign. "The project is a big success. In addition to providing for the country's domestic natural gas needs, partners were encouraged to target different European markets, such as Spain and Italy. Plans to extend pipelines to these markets will be completed within the coming years," said Ahmed. The as yet uncompleted Damietta project will cover an area of 1,200,000 square metres, making it the largest natural gas plant in the world. It is due to begin operating in 2004. "This will be another LNG export project. The target is to export 4.8 million tonnes of LNG to Europe, while an additional 3.6 million tonnes will be exported by the Idku plant," said Ahmed. He added that, except for these two major projects, no other LNG plants have been constructed in the Middle East since 1970. Egypt is also engaged in other regional LNG projects, such as the Arab Gas Pipeline Project. This envisages Egypt, Syria and Lebanon establishing a gas market and system of gas pipelines in stages. According to Ahmed, the first stage, which is already underway, will extend from Arish on the Sinai's north coast, to Aqaba in Jordan. This is expected to cost $220 million. The second stage, expected to begin in 2005, will cost a further $250 million.
