Page 5 - DMEA Week 48 2020

DMEA COMMENTARY DMEA

the slump in global gas prices triggered by the a complex situation lingering since 2012 and
pandemic led to the asset’s devaluation. which couldn’t be resolved in the spring because
Egyptian gas production rose 12.4% year of the pandemic.”
on year to a record 7.2bn cubic feet per day in
the 12 months ending June 30, or 9.3 bcm in Home use
total, according to Egypt’s petroleum ministry. Now that it is self-sufficient, Egypt also wants the
Egypt has another LNG export terminal in Idku, fuel to play a large role in its economy.
but the country was among several spot LNG Petroleum Minister Tarek El Molla
exporters that was forced to curtail production reported last month on Egypt’s progress in
this year because of low prices. expanding use of gas. The country has con-
Global LNG prices are now recovering, how- verted all its thermal power plants to run on
ever, and in late October, the 7.2mn tpy Idku the fuel and has also begun a programme to
plant loaded its first export cargo in over three increase use by households and in the trans-
months. port sector, he said.
Eni said the agreement came “at an impor- Some 5mn households have been hooked up
tant moment.” Thanks to the Italian major’s to receive gas in the past six years, while there
fast-tracked gas projects like Zohr and Nooros, are now 330,000 vehicles on the road that run
“Egypt has regained its full capacity to meet on compressed natural gas (CNG), serviced by
domestic gas demand and can allocate surplus 215 CNG filling stations. The government aims
production for export through its LNG plants,” to convert a further 260,000 vehicles by 2023,
it said. while bringing the number of filling stations to
Eni is looking to build up its LNG business, 600. Eventually it wants to see 1.3mn converted
viewing the fuel as having stronger long-term cars on the road, with the main focus being vehi-
growth potential than oil. It also sees gas playing cles over 20 years old.
a key role in the energy transition. The government has subsidised the cost of
In contrast, Naturgy President Francisco vehicle conversions. Egyptians have also seen
Reynes welcomed the deal saying it would sim- steep increases in prices for gasoline and diesel
plify and reduce “the company’s exposure to gas.” since 2014 as a result of IMF-backed reforms,
Naturgy will be freed from a 3.5-bcm encouraging them to switch. Not only is CNG
annual gas procurement contract to supply its cheaper, but it is also cleaner than more con-
combined-cycle gas turbine (CCGT) plant in ventional fuels, and its expanded use should
Spain, due to continue until the end of 2029, help improve pollution levels in Egypt’s largest
Reynes said. Furthermore, the deal “resolves cities.™

Week 48 03•December•2020 www. NEWSBASE .com P5