• 18:49
  • Monday ,08 August 2011

Gas profit claims all hot air


Home News


Monday ,08 August 2011

Gas profit claims all hot air

CAIRO – Egyptian reserves of natural gas, which account for about 1 per cent of the global reserves, could run out by 2017. Despite this, we export gas to a number of countries, including Israel.

If we run out of gas, we’ll have to start importing it, paying global prices for it in hard currency. 
   In the meantime, Egypt has made huge losses by exporting gas to countries like Israel for shockingly low prices. 
   The country is losing LE28 million every day, in addition to losses of LE3 billion, representing the investments in natural gas projects in Damietta and Edko in el-Beheira Governorate. 
   Professor of Petroleum Engineering at Suez Canal University, Ramadan Abul Ella says that, in the past seven years, the previous Egyptian Government signed a number of agreements to export natural gas to France, Turkey, Spain, Lebanon, Syria, Jordan and Israel.
   Abul Ella is against exporting natural gas because Egypt’s reserves, according to official data, are only 70 trillion cubic feet. 
   “However, a country like Qatar has natural gas reserves of 950 trillion cubic feet, Iran has more than 1,000 trillion cubic feet and the Soviet Union 2,000 trillion cubic feet,” he explains.
   A scientific study published in 2005 warned against Egypt’s exporting its natural gas, as the amount of energy it consumes keeps on rising every year. 
   Abul Ella stresses that Egypt must stop signing accords for exporting natural gas, adding that a major mistake has been made in exporting gas to the East Mediterranean Gas Company, an Israeli facility in which Egyptian businessman Hussein Salem, wanted by Interpol, was involved.
   The problem was that no other companies were allowed to bid for the contract, while the deal didn’t receive the approval of the previous People’s Assembly (Lower House of Egyptian Parliament).
    The previous Egyptian Government also signed two accords with Jordan.
   The first one, signed in 2004, stipulated that Egypt exports 77 billion cubic metres annually for only $1.27 per cubic metre, although the global price at the time was $10. 
   Because of this accord, Egypt is losing LE4.7 billion ($78 million) annually. 
   The second accord committed Egypt to exporting 32 billion cubic metres of natural gas at $3.60 per cubic metre. Because of this, Egypt is losing another LE1.7 annually.
   According to Abul Ella, there are negotiations underway with the Jordanian Minister of Oil to raise the price in the second deal.
    Egypt is losing the above-mentioned LE28 million daily on these three accords signed with Jordan and Israel. 
   Egypt’s former minister of oil Sameh Fahmi said that Egypt makes a daily profit of LE30 million on its natural gas. “But really Egypt is only making LE2 million daily!” Abul Ella told Al-Ahram semi-official newspaper. 
   Concerning the accord signed with Spain to export natural gas there, Abul Ella said that it’s even worse than the accord signed with Israel. 
   It’s the first accord for exporting liquefied natural gas to Europe via Spain and it has required setting up a special plant for liquefying the gas, in Edku. 
   The Egyptian Government has contributed LEl.7 billion to this project, designed to liquefy 14 trillion cubic metres of gas annually, to be exported in containers to Europe.