FOCUS AFRICA – Increasing gas export in a troubled semi-rentier state: the case of Egypt

Since the beginning of the 2011 revolution and the deposition of President Mubarak, Egypt has entered a new phase of political and social unrest. In 2014 Marshal Abdel Fattah el-Sisi won the general elections by an overwhelming majority yet without experiencing an internal social pacification. In this context Egypt participated in the 2015 COP21 and committed itself to both mitigation and adaptation efforts. To date, however, the country has not ratified the Paris Agreement.

According to the World Bank, in 2015 Egypt was the richest country in Northern Africa in terms of GDP. With 89 million people, the country was also  the most populous of the region in the same year. The population growth rate, after having reached a +2.77 per cent peak in 1987, amounted to +2.13 per cent a year in 2015. Nearly 45 per cent of the population lives in urban areas and, according to World Bank data, every Egyptian citizen reached access to electricity in 2012. Its economic and demographic weight makes Egypt a key geopolitical actor in the MENA region, with its natural and energy resources to be considered as core drivers of both national, regional, and international politics.

 

egypt-energy-consumption

Oil and natural gas play a crucial role in the Egyptian economy, accounting for  57.37 and 38.79 per cent of the national energy production in 2014, respectively. The share of oil and gas use in electricity generation was  78 per cent and 12 per cent in 2014, respectively. The transport sector relies heavily on oil products and represented the 25 per cent of the overall national energy consumption – absorbing half the national crude oil production – in the same year. Looking at natural gas, Egypt became a net exporter in 2004 after years of increasing production rates and it is ranked today among the world’s 15 top exporters, according to sector studies. The same sources evaluate the share of gas exportations on the GDP at around 8 per cent, with the recent ENI discovery of the Zohr field expected to boost the domestic supply from 2018, the scheduled date for the  start of production.

 

egypt-oil-gas-consumption

 

During the 2011-2012 unrest, protests also rose because of public disapproval for the Egypt-Israel bilateral agreement on gas exportation, as reported in  a specific study. The deal, signed in 2008, consisted of Egyptian natural gas shipments to Israel at a preferential price. According to the same research, since the beginning of the revolution, there have been over ten attacks to the pipelines, and the agreement was considered as ended in 2012, also due to Israeli new production capacities determined by the operationalization of its 2009 and 2010 gas discoveries. The end of the Egypt-Israel trade partnership has, perhaps, given Egypt the possibility to tighten its export relations with other strategic partners: in 2014 the majority of Egyptian exported gas was delivered to China, Jordan, Malaysia and Japan, in order. Crude oil offshore production and exports remain a core asset in the country’s economy, with Egypt having the sixth largest proved oil reserves in the continent.

As of 2014 the share of solar and wind energy production proved paltry: approximately 0.17 per cent of the national energy production.  The aggregate contribution of both wind and photovoltaic generation to the national electricity production did not reach 1 per cent. The hydroelectric sector, largely depending on the Nile river, accounted for nearly 1.5 per cent of the national energy production. However, according to a 2013 study,  around 90 per cent of the Nile river hydropower has been already utilized and has no potential to be further exploited. The need for drinkable and agricultural water also depend on the Nile overall capacity, thus competitively influencing the hydroelectric energy production potential.

Political instability may have represented a negative factor in terms of mitigation and adaptation policies deployment, and in terms of attractiveness for foreign investments in clean energy  (also through the CDM system, as argued by specific studies). Studies highlight  that the country has a huge potential in terms of wind energy: the area in the west of the Suez Gulf could host wind farms for a 20GW productive capacity, while the overall wind energy generation amounted only to 0.55GW in 2010. The 2010-2024 plan issued by Egypt’s New and Renewable Energy Authority foresees the construction of 0.20GW of wind farms annually. Solar photovoltaic and solar concentrated energy production has space to grow from the current 0.05GW capacity, also given the importance domestic devices have in terms of energy provision for seawater desalinization procedures. In addition, recent studies covered possible developments in geothermal energy production in the eastern desert region, arguing a potential electricity generation of billion KW/h.

According to the UNFCCC inventory, Egypt is the main emitter in  North Africa, accounting for 0.52 per cent of global emissions. In its INDC,  the country committed to a general goal of reaching “high CO2 mitigation levels”, without indicating quantitative targets or a baseline year. In its proposal, the government linked its pledge to international financial assistance and to the necessity to carry on projects of national interest, in a context of expected economic growth and adaptation to climate change. According to the INDC, pathways to achieve good levels of mitigation comprehend the diffusion of locally-appropriate low-carbon energy production technologies and a reduction in energy intensity.  Transport, residential use and industry oil consumption (the three main sources of energy utilization, in order) are therefore to be addressed by mitigation policies. No specific goal is set for the development of REs; a national market for carbon trading “may” be established. Some adaptation policy frameworks are set, covering mainly the problem of water scarcity and the needs of the agricultural sector. According to the presented INDC the entire cost of these general mitigation and adaptation measures amounts to USD 73 million, mostly to be provided through international assistance.
(Image: To Bahariya, Western Desert. Photo credit: Denismartin / Flickr)