News / Africa

Egypt Tackles Fuel Use to Stave Off Crisis

A worker directs vehicles queuing in line at a petrol station, Cairo, March 12, 2013.
A worker directs vehicles queuing in line at a petrol station, Cairo, March 12, 2013.
Reuters
Egypt will cut exports of natural gas and tell major industries to slow output this summer to avoid an energy crisis and stave off political unrest, chairman of the Egyptian General Petroleum Company (EGPC) told Reuters.
 
Tarek El-Barkatawy said Egypt was counting on top liquid natural gas (LNG) exporter Qatar to obtain additional gas volumes in summer, while encouraging factories to plan their annual maintenance for those months of peak demand. Cairo will also need to source more oil to meet seasonal driving demand.
 
A restructuring of its huge subsidy program will reduce smuggling by thieves who now siphon off a fifth of subsidized fuel to sell at profit, El-Barkatawy said. Under the new scheme, subsidies would be applied only at the retail stage, leaving fewer opportunities for theft in wholesale and shipping.
 
The new chairman of the main state oil company took the top job last week after incumbent Sherif Hadara became oil minister. Previously, El-Barkatawy was under-secretary at the oil ministry and has worked for foreign oil companies.
 
He arrives at a strained time in Egypt as the country has been struggling to buy fuel since the revolution that toppled President Hosni Mubarak in 2011. Egypt's economy has floundered with political uncertainty and the loss of tourism, culminating in a currency crisis.
 
Cairo now relies on large loans from friendly countries, notably Qatar, which allows it to buy diesel and gasoline on the open market. For crude oil, it has turned to Libya and Kuwait but the volume is still not enough to run its refineries at full capacity and meet summer demand.
 
"We know that demand is more than supply. We are relying on imports," the chairman said.
 
Hopes of Iraqi oil arriving in time for summer are dwindling. Back in March, Iraq's oil ministry said it was willing to supply 4 million barrels per month.
 
"It is static. It has not been agreed yet, I cannot say when it will be," El-Barkatawy said.
 
At the heart of the fuel problem is the subsidies, which account for around one fifth of Egypt's government spending, and could reach 120 billion Egyptian pounds ($17.4 billion) for the year ending in June as Egypt's fuel needs are forever rising.
 
Egypt produces its own energy but became a net oil importer in 2008 and is rapidly becoming a net importer of natural gas. The government pays for Egyptian drivers to buy fuel for as little as 15 U.S. cents for a liter of diesel.
 
Cairo's new leaders worry that cuts to subsidies would risk political and social unrest, but without cuts the International Monetary Fund will not agree to a $4.8 billion loan seen as necessary to keep the public finances afloat.
 
In addition, Egypt owes at least $5 billion to foreign oil producers, of which half is in arrears.
 
Gas Exports to drop further

Long petrol queues and some protests have become the norm since 2011 and major cities have lately been hit by occasional black outs. To survive the summer, Egypt plans to reduce natural gas exports, with Qatar filling its customers' needs through an LNG swap deal.
 
The first such swap is due to occur in a few weeks, El-Barkatawy said. That will allow Egyptian gas to be diverted to feed Egypt's own power plants, but even that will not be enough and Egypt will need to supplement it by burning fuel oil.
 
"We will convert some burners to run on fuel oil... Either from our system or through imports," he said.
 
Egyptian gas exports have fallen steadily in recent years.
 
Pipeline flows to Israel and to Jordan, Lebanon and Syria stopped last year while in LNG only the Idku export plant operated by BG Group is still working, and at reduced capacity. Exports from another LNG plant at Damietta stopped at the start of the year.
 
Longer term, El-Barkatawy said the country aims to boost production of oil to 1 million barrels per day and natural gas to 7.5 billion cubic feet per day in the next 3-5 years, both of which represent increases of about 35 percent.
 
Egypt will achieve these levels as existing concessions come online and through new technologies, unconventional resources and exploration in the Red Sea and the south, he said.
 
BP's offshore finds in the Mediterranean should add 1 billion cubic feet per day of gas, with some eight other concessions due to come online to reduce depletion.
 
Squeezing out the smuggler

El-Barkatawy does not see a significant decrease in subsidy costs immediately as more ground work must be done, notably removing the smuggler from the equation.
 
To target the middle men, Egypt plans to change the point at which the oil becomes priced at the subsidy level. At the moment, subsidies apply to the whole supply chain, which makes it possible to steal artificially cheap fuel in big quantities through large distribution networks and sell it at a profit at higher prices in Egypt or abroad.
 
EGPC hopes to deter smugglers by keeping the price at the high international level until the actual point of sale. Distributors will no longer have access to subsidized fuel.
 
"Once we deliver the diesel, the financial load will transfer to the gas station," El-Barkatawy said.
 
A new "smart card" system to track purchases of subsidized fuel, due to start next month, will also make it easier to fight theft.
 
"We will introduce the smart card soon and even apply it to the assembly points and gas stations and make sure that any diesel or gasoline unloaded from ships is accounted for when it goes onto trucks to the distributors and gas stations."
 
Data accumulated from smart cards will eventually help the government reduce the subsidy bill without spurring protests and hurting industry, he said.
 
"So by doing this, it will improve our credit level and will be one step in the right direction to secure the IMF loan."

You May Like

Video Anti-Muslim Sponsor of Texas Cartoon Contest Draws Ire

Pamela Geller's supporters say she speaks truth about sensitive topic, while critics say she preaches 'that Islam is inherently evil' More

East Meets West in Exhibition Showing Chinese Influence on Fashion

Metropolitan Museum of Art exhibition juxtaposes influence of art, imagery and culture, from Imperial China to the present day, on Western fashion and design More

South Africa Begins New Love Affair With Vinyl Records

Enthusiasts say the 'rebirth' of vinyl is resulting in a rebirth of music in South Africa More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Mass Grave Exposes Entrenched Trafficking in Thailandi
X
May 05, 2015 5:50 PM
Police in southern Thailand have found two more camps believed to have held human trafficking victims -- one containing a buried skeleton. This comes just days after officials announced arrests in connection with the grisly discovery of 26 bodies in a mass grave at another location. Officials suspect as many as 400 mostly ethnic Rohingya from Myanmar were being held for ransom at the remote camp near the Malaysian border. Steve Sandford reports on developments in the case.
Video

Video Mass Grave Exposes Entrenched Trafficking in Thailand

Police in southern Thailand have found two more camps believed to have held human trafficking victims -- one containing a buried skeleton. This comes just days after officials announced arrests in connection with the grisly discovery of 26 bodies in a mass grave at another location. Officials suspect as many as 400 mostly ethnic Rohingya from Myanmar were being held for ransom at the remote camp near the Malaysian border. Steve Sandford reports on developments in the case.
Video

Video Russia's 'Victory Day' Glory Over Nazis Overshadowed by Ukraine

ussia is preparing to commemorate the 70th anniversary of the end of World War II, known since the Soviet era as “The Great Patriotic War,” with a massive parade on May 9th of military hardware and millions of medals handed out to veterans or their relatives. But critics say the Soviet-style display of power and nationalism overshadows tragic scars during and after the war that still influence politics and foreign policy, especially in the current Ukraine crisis.
Video

Video WWII Anniversary Brings Old Friends and New Worries

The 70th anniversary of the end of World War II has special significance, with Russia becoming more assertive in Ukraine and sending its military planes to the edges of western countries’ airspace. Changes in the geostrategic balance and the transatlantic relationship are felt across the continent, not least in German towns that have hosted U.S. military bases since the defeat of Nazi Germany. VOA’s Al Pessin visited Schweinfurt, Germany, where a large base closed last year.
Video

Video Abraham Lincoln Funeral Re-created for 150th Civil War Anniversary

Over the last four years, commemorative events to mark the 150th anniversary of the U.S. Civil War have brought thousands of visitors to battlefields and historic landmarks across the country. As VOA's Kane Farabaugh reports from the Midwest state of Illinois, the final event in the Civil War's sesquicentennial honors the final journey home of the slain American President, Abraham Lincoln.
Video

Video Campaign Raises Money to 'Uncuff' Journalists

Beginning Sunday – World Press Freedom Day – the Committee to Protect Journalists, a private U.S. group, is launching a campaign to bring attention to their plight and encourage efforts to free them. Deborah Block reports.
Video

Video Volunteers Pull Together to Aid Baltimore Riot Victims

Calm has returned to Baltimore, Maryland, after authorities lifted an overnight curfew imposed almost a week ago to stem the rioting that followed the funeral of Freddie Gray - the 25-year-old black man who died of spinal injuries suffered while in police custody. Six police officers, three of them African-American, have been charged in connection with his death. Baltimore is now trying to get back to normal, in part with the help of volunteers who responded to calls to help those in the city'
Video

Video From Aleppo To Berlin: Band of Brothers Escapes Civil War

Hundreds of thousands of Syrians have fled the civil war in their country and journeyed to Europe by boat across the Mediterranean. It is a terrifying ordeal with dangers at every turn. A group of Syrian brothers and their friends describe their ordeal as they try to reach Germany. VOA's Henry Ridgwell reports. ...
Video

Video Rural Nepal Suffers Brunt of Quake’s Devastation

Nepal is still coming to grips with the full extent of the devastation and misery caused by last Saturday’s magnitude 7.8 earthquake. Some of the hardest-hit communities have been cut off by landslides making it difficult to assess the precise toll. A VOA News crew has been among the first to reach a few of the smaller, remote communities. Correspondent Steve Herman reports from the Sindhupolchak district, east of Kathmandu, which suffered greatly in Nepal’s worst quake in more than 80 years.
Video

Video Obama Praises Work of 3 Immigrant Journalists

President Barack Obama met with three immigrant journalists at the White House Friday to praise them for their work ahead of World Press Freedom Day, May 3. In attendance: Dieu Cay (his pen name) a blogger from Vietnam recently released from prison; Lily Mengesha from Ethiopia who was harassed and detained for exposing the marrying off of young girls as child brides, and Fatima Tlisova, an ethnic Circassian from the North Caucasus region of Russia, who works for VOA's Russian Service.
Video

Video Middle East Atheist Channel Defies Taboo

In Egypt, a deeply religious country in a deeply religious region, atheism is not only taboo, it is dangerous. It is sometimes even criminal to publicly declare nonbelief. Despite the danger, one group of activists is pushing back with a new online channel that defends the right not to believe. VOA’s Heather Murdock reports.
Video

Video Nepal Quake Survivors Tell Their Stories

Against all hope, rescuers have found a few more survivors of the devastating earthquake that hit Nepal last Saturday. Mountain climbers and hikers trapped in remote places also have been airlifted to safety, and aid is finally reaching people in the areas closest to the quake's epicenter. Survivors and rescuers are now recounting their experience. Zlatica Hoke has this story.
Video

Video Lessons for Germany, Europe Remain on Anniversary of WWII's End

The 70th anniversary of the end of World War II will be marked May 8-9 in all European countries except Germany, which lost the war. How is the war viewed there, and what impact is it still having? From Berlin, VOA’s Al Pessin reports.
Video

Video Nepal Town Destroyed By Quake Counts Itself Lucky

Foreign search teams on Wednesday began reaching some of the communities outside Kathmandu that suffered worse damage than Nepal’s capital from last Saturday’s massive earthquake. VOA Correspondent Steve Herman is in Sankhu - a town of about 10,000 people - where there is relief the death toll is not higher despite widespread destruction.
Video

Video Somali Hotel Chain Owner Strives to Make a Difference

Many in the Somali diaspora are returning home to make a new life despite the continuing risks. Since 2011 when a military campaign against Al-Shabab militants began making progress, members of the diaspora community have come back to open hospitals, schools, hotels, restaurants and other businesses. Abdulaziz Billow in Mogadishu profiles the owner of a chain of hotels and restaurants who is helping to bring change to the once-deadly Somali capital.
Video

Video Child Migrants Cross Mediterranean Alone, Face Unknown Future

Among the thousands of migrants making the deadly journey by boat to Europe, there are unaccompanied girls and boys. Some have been sent by relatives to earn money; others are orphaned or fleeing war. From a shelter for young migrants in the Sicilian town of Caltagirone, VOA's Henry Ridgwell reports.

Poll: Baltimore Police Charged

Poll archive

VOA Blogs