PETROLEUM SECTOR DEVELOPMENTS IN EGYPT

1 PETROLEUM SECTOR DEVELOPMENTSIN EGYPTM arch 2009 2009 Business Studies & Analysis Center. All rights reserved. Unauthorized reproduction, copying, re-mailing, storage or website posting is prohibited. Allinformation in this report is verified to the best of the author s and the publisher s ability. The researcher would like to extend deep appreciation and gratitude to the followingexperts and key figures for their support and valuable comments throughout thepreparation of this study (names are listed alphabetically) Sameh Fahmy (Eng.), Minister of PetroleumAbd El Rahman Salah El Din (Eng.), Executive Chairman, New & Renewable Energy Authority Khaled Abu Bakr (Eng.), Managing Director, TAQA (Arab Company for Energy)Nader Zaki, Head Of Finance, Gas, BP EgyptRodney J. Eichler, Executive Vice President and General Manager, Apache EgyptSalah Hafez, Chairman, PETZED Investment & Project Management, Hamdy (Eng.)

2 , First Undersecretary, Ministry of PetroleumTawfik Diab (Eng.), Managing Director, PICO International PetroleumThomas Thomason, CEO, Egyptian Refining CompanyTom Walter, Chairman and Managing Director, Exxon Mobil EgyptACKNOWLEDGEMENTSiAmCham BSAC 2009iiAmCham BSAC 2009 After a recent period of steady growth, global oil production and reserves have declinedfor the first time since 2002. Global demand for oil continued to increase up to the firstquarter of 2008; however, for the first time since 1983, it has gone into decline due to theglobal financial crisis. Demand for natural gas an attractive, cheaper alternative to oil had also been increasing but is now in decline for the same PETROLEUM SECTOR is a key factor in the growth of EGYPT s economy; accounting for15% of GDP in 2007/2008. Oil and gas cover 94% of EGYPT s primary energy requirementswith crude oil production in 2007 standing at 710,000 barrels per day (bpd), and naturalgas production at billion cubic meters, nearly double 2002 production levels.

3 Egyptis the second largest producer of natural gas in Ministry of PETROLEUM has granted several concessions for exploration and drillingactivities to increase crude oil and natural gas production. Particular emphasis has beenplaced on the oil SECTOR where production has been in decline since 1993 in an attemptto meet increasing domestic an attempt to accommodate the global hike in energy prices, EGYPT has taken severalmeasures to adjust the domestic and export prices of both oil and gas to reduce the budgetdeficit on the domestic s petrochemical industry represents 12% of its total industrial production and thecountry is set to become one of the region s leading players, especially with theimplementation of the National Plan for Petrochemicals (2002-2022).The challenges of finding sustainable means of meeting future energy needs and reducinggreenhouse gas emissions have led many countries, including EGYPT , to opt for renewableenergy resources, such as biofuels, wind power, thermal energy and nuclear energy.

4 Egyptpossesses abundant renewable energy resources and has begun to integrate thesealternatives within its energy mix and to promote renewable energy technologies on acommercial SUMMARYiiiAmCham BSAC 2009 LIST OF FIGURESLIST OF TABLESLIST OF ACRONYMSPART I. GLOBAL PETROLEUM TRENDS1. Oil: International Global Crude Oil Prices2. Natural Gas: International Global Natural Gas Prices3. Renewable Energy4. Petrochemicals: International MarketPART II. INTRODUCTION TO THE PETROLEUM SECTOR IN EGYPT1. Economic Significance2. Industry Structure3. The Legal Concession Repatriation of Legal Revisions4 Energy Pricing in PETROLEUM SubsidiesPART III. THE OIL INDUSTRY IN EGYPT1. Reserves2. Agreements, Exploration Activities and Discoveries3. Production4. Market Players5. Transportation6.

5 Downstream Activities: Refining, Processing and Distribution and Marketing7. Export Domestic PricesPART IV. THE NATURAL GAS INDUSTRY IN EGYPT1. Reserves2. Agreements, Exploration Activities and Discoveries3. Production and Consumption4. Market PlayersTABLE OF CONTENTS vvivii1123456677891013131718181919192123 232325262729313232333535363840ivAmCham BSAC 20095. Pipeline LNG Exports6. Local Export PricesPART V. THE PETROCHEMICALS INDUSTRY IN EGYPT1. Introduction to the Egyptian Petrochemicals Industry2. Petrochemical Market Profile3. Market Players4. National Plan for the Petrochemical Industry5. Public Private PartnershipsPART VI . FACTORS AFFECTING THE development OF THEPETROLEUM SECTOR1. Supporting PETROLEUM Services and Equipment2. Corporate Social Responsibility (CSR)3. Environmental DevelopmentsPART VII.

6 ALTERNATIVE ENERGY TRENDS1. Wind Energy2. Solar Energy3. Biofuels4. Nuclear EnergyPART VIII . CONCLUSION1. International Energy Outlook2. EGYPT Outlook SWOT Analysis of EGYPT 's PETROLEUM Recommendations SELECTED REFERENCESA ppendix I. EGPC 2006 Bid RoundAppendix II. GANOPE 2008 Bid RoundAppendix III. EGAS International Bid Round 2008 Appendix IV. The Arab Gas Pipeline Appendix V. Petrochemical Production Flow Appendix VI. EGYPT Hydrocarbons Industry OverviewAppendix VII. Global Crude Oil (2007)Appendix VIII. Global Natural Gas (2007)4141434444444545454849515252525354 55555657585959606161636566676768697070vA mCham BSAC 2009 Figure Oil Reserves by RegionFigure & Non-OPEC Reserve Shares (2007)Figure 10 Crude Oil Producing CountriesFigure Refined Products DemandFigure Oil Prices (Monthly Averages)Figure Natural Gas Proven Reserves by RegionFigure Natural Gas Prices (Henry Hub)Figure Market Drivers for Renewable Energy UsageFigure Energy Share of Global Energy ConsumptionFigure Petrochemical Production (Thousand Tons)

7 Figure SECTOR Growth in GDPF igure Trade BalanceFigure PETROLEUM TradeFigure Share of Total FDIF igure PETROLEUM InvestmentsFigure Natural Gas Price IncreasesFigure Electricity Price IncreasesFigure SubsidiesFigure of PETROLEUM Subsidies in GDP and Total Government ExpenditureFigure of PETROLEUM Products SubsidiesFigure Proven Oil ReservesFigure Utilization in EGYPT by LocationFigure Distribution of Crude Oil ProductionFigure Oil Production and ConsumptionFigure of Oil TransportationFigure s PETROLEUM PortsFigure and Consumption of Refined Products by TypeFigure Capita Consumption of PETROLEUM Products in EgyptFigure Suez Blend Price vs. Different Global Crude Oil PricesFigure Price DifferentialsFigure Price DEVELOPMENTS of PETROLEUM Products Figure s Proven Natural Gas ReservesFigure s Proven Natural Gas Reserves by RegionFigure Gas Production and ConsumptionFigure Natural Gas Consumption by UsageFigure Connections Extended with Natural Gas NetworksFigure LNG Export DestinationsFigure Savings from Natural Gas Export Price AdjustmentsFigure s Petrochemical Market SizeFigure Petrochemical Exports Figure Petrochemical Imports Figure of PolymersFigure of PolymersFigure Plan for Petrochemicals Figure Wind Energy Expansion PlanFigure Primary Energy Demand (1980 to 2030)Figure World Oil Production (OPEC/Non-OPEC)

8 LIST OF FIGURES234556899111314151516202121222223 2525262829303032333435363839394144454646 474849555960viAmCham BSAC 2009 LIST OF TABLEST able 10 Crude Oil Producers (mb/d)Table 10 Crude Oil Consumers (mb/d)Table 10 in Natural Gas Producers (bcm)Table 10 in Natural Gas Consumers (bcm)Table Region Petrochemical Capacity (Thousand Tons)Table Ethylene Capacity Growth by Region (Thousand Tons)Table Upstream Companies in EgyptTable Upstream CompaniesTable EGPC Bid Round 1 Table Crude Oil Discoveries in EgyptTable Joint Ventures with International CompaniesTable CompaniesTable Refining CapacityTable Refineries in EgyptTable Natural Gas Discoveries in EgyptTable 2008 Bid RoundTable EGYPT Gas Pipeline Connection PlanTable Production of Major CompaniesTable Arab Natural Gas PipelineTable LNG Export SchemesTable Consumption in EGYPT (2006)Table Allocated Land for Petrochemical ProjectsTable Petrochemical Plan: Phase I Projects under development (May 2008)Table Investment OpportunitiesTable Wind Farm Projects in EgyptTable Biofuel Projects in EGYPT (Ministry of PETROLEUM )Table Energy in EGYPT : SWOT347811121717242427272931373740404243 47505051565758