Fahmi: LNG exports necessary for foreign sector investors to achieve profitability
CAIRO: Minister of Petroleum (MOP) Sameh Fahmi said Tuesday he hopes one day Egypt will no longer have to export natural gas and retain its reserves for local consumption. Fahmi s comments came in response to growing public criticism of the government s liquefied natural gas (LNG) export policy.
Speaking at the opening of the three-day International Association for Natural Gas Vehicles Conference, Fahmi said the High Energy Council s policy of exporting a third of production, retaining another third for local use, and saving the last third for future generations makes the most sense considering the current state of the economy. The conference is bringing together representatives of more than 100 companies from 30 countries in addition to scientists and politicians.
Our natural gas export policies are very balanced, said Fahmi. And they will continue to be implemented until HEC alternative policies raise or lower export quantities.
LNG production reached 38.4 million tons in the 2005-6 fiscal year on the back of 42 new field discoveries, according to MOP. The production figure represents a 50 percent increase from the 25.5 million tons recorded in 2004-5.
Fahmi added that allowing sector companies to export large quantities is the only option available to the government to enable these companies to achieve profitability. The other option, he said, would be to request funds directly from the Ministry of Finance in order to meet MOP s commitments as a partner with foreign oil companies operating in Egypt.
There are investments being made by our foreign partners that can only be returned through exporting LNG, Fahmi said.
According to MOP figures, Egypt has climbed into the top 10 countries with LNG-operated motor vehicles. Fahmi said about 73,000 cars now run on LNG. The ministry plans to increase the figure to 100,000 and provide incentives to already operating companies to double the current 100 LNG fuel stations by 2010.
In September, Prime Minister Ahmed Nazif commissioned MOP to restudy local LNG prices to allow them to keep up with the increase in global oil and gas prices. Local rates are among the lowest in the world, costing less than LE 0.50 per liter for vehicles. Nazif s decision came in response to the requests of large market players including British Gas (BG), which controls more than 40 percent of the Egyptian market, for the government to consider raising its LNG price caps.
The government has long defended its policy of capping energy prices, including LNG, by saying it is in the best interest of attracting foreign investments. Fahmi vowed any increase in LNG costs would not affect the 2.3 million residential customers now benefiting from direct supplies to their homes.
Local and foreign investment in the LNG sector reached $3 billion in 2005-6, an almost 100 percent increase over the $1.53 billion invested in 1999-2000, according to MOP.
