Over the past years, the petroleum sector in Egypt has faced significant challenges affecting most of the Egyptian economic indicators and the development plans, due to growing consumption, high import bills and dues of the foreign partners. However, the ministry is introducing a new vision as well as an ambitious strategy aiming at developing explorations and attracting foreign investment, to shift to the center of a regional trading power. In this context the CEBC& ECSD organized an event with H.E. Eng. Tarek El Molla, Minister of Petroleum & Mineral Resources to discuss the topic: “The Egyptian Petroleum sector between Current Challenges and Future Opportunities”.

In the opening remarks, Eng. Motaz Raslan mentioned that the petroleum sector had suffered from consecutive crises that not only affected the petroleum sector , but the overall economic indicators , as a result of the wide gap between supply and demand , slowdown in investment and new explorations and delaying the implementation of many projects; due to the circumstances experienced by Egypt in the recent years. In a short period of time, the petroleum sector was able to overcome these challenges and has achieved a state of stability in the availability of fuel, positive indicators began to increase especially with the excessive gas explorations in north Alexandria, which was followed by a great competition from major international companies to enter the Egyptian market.

There are still some obstacles which limit the acceleration of achievements in this sector, most importantly the continuous increase in consumption rates, which creates higher import bills approaching billion dollars a month. In addition to the entitlements of foreign partners, rising subsidy bills especially after doubling the value of the dollar, the impact on the foreign reserves and ending the supply of Saudi Aramco to Egypt. So we must search for new alternatives to generate electricity and run factories to reduce the import bills and rationalize consumption rates.

Eng. Motaz then welcomed H.E. Eng. Tarek Al-Molla Minister of Petroleum and mineral resources, thanking him for accepting the invitation, also welcoming Mr. Saiid El-Derini chairman of Tam Oilfield Services, Mr. Sherif El-Gabaly chairman for of Polyserve Group and Mr. Muhammad Zaher president of Quartz Core for Mineral Resources.

Minister Tarek Al-Molla began his speech mentioning that the current investment in the petrochemical sector is amounted to be about $ 7.3 billion. He added that the ministry is working with several companies in the fields north of Alexandria, which will enter the service by the middle of 2017, also the 1.5 billion cubic feet of natural gas explored will increase the production rates by the end of 2017.

There are also major companies who are enthusiastically searching for natural gas in favor of Egypt, and there is a ministerial committee headed by the Ministry of Petroleum, aiming to raise our capabilities of production in the petroleum sector, pointing out that the dues of foreign oil companies operating in Egypt are $ 3.6 billion and we are working with the central bank on rescheduling them.

Minister Al-Molla said that there are eight major companies operating in the coastal areas in Egypt, pointing out that by 2022, 20% of the production of the new electricity-powered is expected to be generated, thus contributing to energy subsidies in Egypt. Also, the Egyptian gas stations can be used in liquefaction the gas from Cyprus and exporting it in exchange for a financial stake, or it can be used locally to provide Egyptian gas, he also mentioned that a new law on the use of gas is expected to be approved in the following period, with the goal of adjusting procedures to ensure good utilization of resources and their conservation; it will also arrange trading and exploration operations, as well as the trade of the private sector in gas, to ensure the rights of future generations controls. Adding that the ministry is ready to face the future challenges through a vision strategy planned with major petroleum sector advisory offices to overcome any problematic challenge.

The Minister explained that we should be hardly prepared for the development plans, saying: “We are able to make the sector in its best form through development, production, research, exploration and marketing of wealth by 2020”, pointing out that the Gulf countries raised their hands for fuel subsidies such as the UAE and tied the oil price to the international world price, and soon Saudi Arabia and Kuwait will end fuel subsidies, which shows that we must be well prepared to follow the same route.

Finally, he pointed out that the energy subsidies had cost L.E 500 billion pounds during the past five years, stressing that the state will not end oil subsidies, but it will be rationalized and will end the wrong targeting so as to promote the reform of the distorted financial structures and to deliver subsidies to those who need it.

The floor was then opened for questions session, where wide range of vital topics were raised concerning the development of local companies’ needs, as it must be put on the priorities list for the companies that produce raw materials, the wrong targeting of subsidies as the current situation reflects the state unacceptable deformity, in which the upper class gets the wider share of oil subsidies instead of the lower class. Other ideas were suggested to promote the sector and how applying them will contribute to the development of Egypt.