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

Thousands of Ethiopian Israelis Rally Against Racism

PM Netanyahu says he will meet Damas Pakada, the Ethiopia-born Israeli soldier who was filmed being beaten by two policemen More

10 Migrants Drown, While 4,100 Rescued off Libyan Coast

All of those rescued are being ferried to Italian ports, with some arriving on Italy's southernmost island, Lampedusa, and others taken to Sicily and Calabria More

HRW: Saudis Using US Cluster Bombs in Yemen

Human Rights Watch says photographs, video and other evidence have emerged indicating cluster munitions have been used in 'recent weeks' in airstrikes in Houthi stronghold in northern Yemen More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
From Aleppo To Berlin: Band of Brothers Escapes Civil Wari
X
Henry Ridgwell
May 03, 2015 1:12 AM
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 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 Black Families Use Baltimore Case to Revisit 'Police Talk'

Following Freddie Gray’s death in police custody this month, VOA interviewed black families throughout the eastern U.S. city of Baltimore about how they discuss the case. Over and over, parents pointed to a crucial talk they say every black mother or father has with their children. Victoria Macchi has more on how this conversation is passed down through generations.
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 'Woman in Gold' Uses Artwork as Symbol of Cultural Identity

Simon Curtis’ legal drama, "Woman in Gold," is based on the true story of an American Jewish refugee from Austria who fights to reclaim a famous Gustav Klimt painting stolen from her family by the Nazis during World War II. It's a haunting film that speaks to the hearts of millions who have sought to reclaim their past, stripped from them 70 years ago. VOA's Penelope Poulou 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 First Surgical Glue Approved for Use Inside Body

While medical adhesives are becoming more common, none had been approved for use inside the body until now. Earlier this year, the first ever biodegradable surgical glue won that approval from the U.S. Food and Drug Administration. VOA’s Rosanne Skirble reports on the innovation and its journey from academia to market.
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 Study: One in Six Species Threatened with Extinction

Climate change is transforming the planet. Unless steps are taken to reduce global warming, scientists predict rising seas, stronger and more frequent storms, drought, fire and floods. As VOA’s Rosanne Skirble reports, a new study on species extinction underscores the need to take action to avoid the most catastrophic effects of rising temperatures.
Video

Video Taviani Brothers' 'Wondrous Boccaccio' Offers Tales of Love, Humor

The Italian duo of Paolo and Vittorio Taviani have been making movies for half a century: "The Night of the Shooting Stars," "Padre Padrone," "Good Morning, Babylon." Now in their 80s, the brothers have turned to one of the treasures of Italian culture for their latest film. VOA’s Carolyn Weaver reports.
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.
Video

Video Baltimore Riots Shed Light on City’s Troubled Past

National Guard troops took up positions Tuesday in Baltimore, Maryland, as authorities tried to restore order after rioting broke out a day earlier. It followed Monday's funeral of a 25-year-old black man who died while in police custody earlier this month. VOA's Chris Simkins reports.
Video

Video Challenges Await Aid Organizations on the Ground in Nepal

A major earthquake rocked Nepal on Saturday and killed thousands, injured thousands more and sent countless Nepalese outside to live in makeshift tent villages. The challenges to Nepal are enormous, with some reconstruction estimates at around $5 billion. Aid workers from around the world face challenges getting into Nepal, which likely makes for a difficult recovery. Arash Arabasadi has the story from Washington.

Poll: Baltimore Police Charged

Poll archive

VOA Blogs