Tag Archives: Morsi

Refinery Progress Highlight’s Egypt’s Domestic Downstream Push

ImageAfter years of delays and challenges from inside the country and out, Egypt’s new refinery project appears poised to finally break ground and it could not come at a better time.

In the two years since the collapse of the government of Hosni Mubarak, Egypt has faced significant challenges to meeting domestic energy needs thanks to increasing demand, an unsustainable state subsidy program and an overall loss of confidence on the part of production partners. In an effort to cut down on costly imports, the country’s new government has pushed for substitution options, the most notable of which is a $3.7 billion refinery projects helmed by Citadel Capital.

First proposed in 2007, the project has encountered a series of obstacles to completion including a wider global economic slowdown that made securing needed financing all but impossible. More importantly, Egypt became the poster case for the Arab Spring, spurring the collapse of the long-standing government of Mubarak. This development pulled the rug out from under the country’s business environment, again, making financing a difficult goal to reach.

Still, while financing the project took far longer than they expected, Citadel was able to close the process last summer, clearing the way for the project finally moving forward. The facility will produce more than 4.2 million tons of refined product a year, halving the country’s imports and saving the government an expected $300 million during that time. Most importantly for a country facing an increasingly frustrated population that has faced blackouts and cuts in services due to fuel shortages, the facility means a long-awaited boost in downstream capacity.

Citadel was able to meet financing needs with the help of a number of outside actors that looked past the country’s current uncertainty. These have included the African Development Bank, the European Investment Bank and Qatar who have pledged billions in investment and support for Egypt over the last several months.

Other efforts to curb dependence on expensive imports at a time of political and economic volatility have included possible new trade deals with Iraq and a soft credit crude agreement with Libya. 

Image: Arabian Business

Originally Posted: Newsbase Downstream Monitor, All Rights Reserved

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Cairo’s Sinai Efforts Falling Short

Weeks after the Egyptian government pledged action to halt growing unrest in the Sinai Peninsula, military action appears to have had minimal effect on stopping violence and safeguarding the country’s energy trade route to Jordan.

The promised action followed months of growing instability in the region, beginning shortly after the fall of the government of Hosni Mubarak. In addition to a growing number of kidnappings, the Sinai saw 15 direct attacks on natural gas pipelines bound for Jordan and Israel. In early August, a single attack that led to the deaths of 16 Egyptian soldiers spurred newly elected President Mohammed Morsi to launch a military initiative aimed at bringing the region back under control. However, as recently as this weekend, attacks have continued, including one that resulted in the deaths of three police officers in El-Arish.

This latest event was followed by the dismissal of the North Sinai security chief, General Ahmed Bakr as well as protests among local police groups demanding greater attention from government forces and the passage of emergency laws. In response, Morsi once again pledged direct action, but will likely face resistance from a local Bedouin population with a long history of conflict with Cairo.

In addition to the clear goal of returning order to the country’s eastern region, the government’s efforts are especially important to protecting a natural gas export route to Jordan and beyond. Although exports from Egypt have recently halted as Cairo deals with a surge in local consumption and dwindling supply, the country’s ability to exploit domestic reserves for future growth will rely on a dependable export route to the east. According to a Jordan Times report, talks between the two governments have suggested that exports could resume as soon as next month, with a possible boost in quantity on the table.

While the government is working to address local consumption issues through a reassessment of subsidy programs and energy diversification, they have also begun pushing for greater exploration efforts, including both on and offshore projects. Recently, the Morsi government offered tenders for fifteen on- and offshore blocks for natural gas exploration.

Image: The Guardian

Originally Posted in Newsbase’s MEA Downstream Monitor

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