News / Middle East

No Quick Fix in Sight for Egypt's Energy Chaos

People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.
People argue at a petrol station during a fuel shortage in Cairo, June 26, 2013.
Reuters
None of the new ministers to be appointed by Egypt's military-backed leaders faces an easy task, but perhaps special sympathy should be reserved for the brave soul who takes on the energy ministry.

Long lines at fuel stations and power cuts were among the main grievances of protesters who prompted the army to overthrow the elected president last week.

The lines have since shortened a little, though they remain, and few will easily give up on the 1.85 Egyptian pounds [$0.26] a liter gasoline, which along with other energy subsidies, eats up one-fifth of the state budget.

Even with the economy on life support since the revolution of 2011, a growing population has kept energy demand increasing so that it now outstrips the production of oil and gas from fields in the Western Desert, Nile Delta and offshore.

Yet the state of flux in government and state-owned firms since the fall of Hosni Mubarak has thwarted projects intended to tackle the problems. And the jailing of Mubarak's veteran energy minister over a gas export deal has sent a chill through the ranks of officialdom, discouraging initiative.

Vicious cycle

Beyond the immediate problems that energy chaos poses for Egypt and those working there - including big oil companies that figure Cairo owes them more than $5 billion - the disarray plays a major part in holding back investment in a range of industries that Egypt badly needs to create jobs and prosperity.

Failure to correct it could prolong a vicious cycle of unrest and insecurity. The omens of the immediate past are poor.

Both the military authority that replaced Mubarak and Mohamed Morsi, the Muslim Brotherhood member elected president a year ago, pressed international firms to sell oil and gas on credit as foreign reserves dwindled.

As a result, these firms stalled their exploration and drilling projects. Talk of cutting fuel subsidies costing $15 billion a year has gone nowhere. Imports from friendly Arab states remain on a hand-to-mouth basis, some of them gifts, while Egypt remains unable to import liquefied natural gas (LNG) for lack of equipment.

“It's a total mess,” said an industry source involved in one of Egypt's most important energy infrastructure projects. “It seems like no one is making decisions.”

Terminal Problems

A $250-million project to install a floating terminal to import LNG was launched last year. It should have been finished. Egypt can export LNG, but it cannot import it without the terminal.

The misadventures of the import terminal reflect a broader story of mismanagement in the energy sector, according to industry experts. Two initial tenders for work were issued by state gas firm EGAS. These later were canceled after confusion over terms. Now state oil company EGPC has taken over the process.

An EGPC official said the tender it issued had closed on June 24. The official could neither say what the result of the bidding was, however, nor say when it would be available.

Egypt must act quickly to charter a floating terminal, of which there are only two now available globally. And even if a tender is awarded immediately, it would probably not be ready to import for a year. That will leave Egypt buying more expensive fuel oil as a stop gap.

Some in the industry think the new administration, backed by the army, can get the LNG project moving - though the military made little notable progress in the energy sector during the 17 months they were running the country before Morsi took office.

Egypt became a net oil importer in 2008. Its population is growing at more than 2 percent a year and now stands at 84 million. It also is moving rapidly to become a net importer of natural gas after years of being a large exporter via ventures with oil majors, such as BG, GDF Suez and Eni.

“Starting from 2004-2005, a lot of heavy industry was built-like cement, steel factories, which the country needs,” said Mohamed Shoeib, ex-chairman at EGAS and currently managing director at private equity firm Citadel Capital.

With average gas demand rising about 8 percent annually, though, reforms were held up by paralysis in decision-making.

Reforms lacking

Large projects, such as BP's massive offshore West Nile Delta fields, have been delayed and output goals have been pushed back.

Last year, Sameh Fahmy, Mubarak's oil minister for 11 years until the revolution, was convicted along with other senior officials who were sentenced to up to 15 years in jail for their roles in selling gas to Israel too cheaply.

“People are afraid of being taken to court,” said Shoeib. “It's a problem when a decision must be made.”

Strains were on show earlier this year at EGPC, when a new round of staff changes and dismissals was announced by the Muslim Brotherhood-led government. A diplomat who was present saw angry officials bang on the chairman's door.

With a new cabinet expected next week, there is sure to be a purge.

The overthrow of the Muslim Brotherhood has opened the way for aid this week from Saudi Arabia, Kuwait and the United Arab Emirates, some of it in the form of fuel cargoes.

A flurry of energy deals signed by the Muslim Brotherhood during the past year with its closest allies and friendly states - such as Qatar, Libya and Iraq - all were stalled for months as the sides struggled to agree on final terms.

You May Like

Lion Cecil's Killing Sparks 'Canned Hunting' Debate in S. Africa

Conservationists believe incident, which triggered worldwide outrage, will reshape debate about practice in which hunters are allowed to target animals bred for hunting More

Taliban's New Leader Says Jihad Will Continue

Top US Afghan diplomat also meets with Pakistani, Afghan officials following news of Mullah Omar's death More

Environmentalists Issue Warning on Mekong Biodiversity

Scientists say decades of economic development, hydropower-dam construction, lax law enforcement and trafficking have taken their toll More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Astronauts Train Underwater for Deep Space Missionsi
|| 0:00:00
...    
🔇
X
George Putic
July 30, 2015 8:59 PM
Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

VOA Blogs