While for a time Egypt was reliant on natural gas imports to fulfill the ever-growing energy needs of domestic business, Egypt is now on track to leverage its gas windfall to not only to meet the country’s growing demands but return to its previous status as a gas exporter. Egypt’s largest producing field, Nooros, has been churning out a daily output of 900 million cubic feet and is soon to be joined by output from the development of fields in the West Nile Delta. Furthermore, the discovery of the huge Zohr gas field, the largest known in the Mediterranean and one of the world’s biggest natural-gas finds, begins production later this year and could soon power Egypt’s gas needs for decades.
In a step that will bring Egypt ever closer to its plan to become a regional hub for the trade of liquefied natural gas, the government has passed a law to clear the way to private participation in the sector. The measure, which reforms the regulations focused on the activities of the gas market, received parliamentary approval on 5 July and was subsequently signed into law by President Abdel Fattah el-Sisi on 7 August. Before the new law goes into effect later this year, the president of the Council of Ministers will issue specific regulations to President el-Sisi within the next six months.
Here are five things to know about the new law:
1. Backed by reforms: The law comes as part of Egypt’s recent IMF backed reforms to spur investment in the country’s ever-growing economy.
2. Independence: The new rule arises as a response to end years of gas shortfalls in Egypt and become once again self-sufficient by 2019.
3. Liberalization and competition: It establishes a new regulatory body, headquartered in Cairo, to supervise the liberalization of the Egyptian natural gas sector. As part of this, the body will give licenses and prevent any monopolies from forming.
4. Supply and demand: The law will facilitate increased flexibility and transparency in the market, as, instead of the government dictating the structure of the gas market, now the market will determine the true prices which will in turn provide customers with the ability to bargain.
5. Infrastructure: The measure provides the eventual opportunity for private companies to ship, store, distribute, and market gas in Egypt using the local pipeline network.
A long time coming, this new law serves to complement the many other sweeping reforms passed during the year aimed at stimulating the Egyptian economy and driving increased investment to the region. Looking towards the future, this action to open up the Egyptian gas market is a first step towards increasing the sector’s competitiveness and efficiency, raising Egypt’s presence in the global market as a natural gas leader.
Tue, Sep. 5, 2017
