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Egypt gas exports drop as fuel needed in domestic energy crisis

File - An Egyptian man directs a truck as drivers line up to buy fuel at a gas station in Cairo on March 11, 2013.AFP PHOTO / KHALED DESOUKI

CAIRO: Egypt’s natural gas exports dropped 80.94 percent in April from a year earlier, according to the latest official statistics, as gas promised for export was diverted to meet a domestic energy crisis.

Gas production also fell 14.66 percent in April compared with a year earlier, according to a report by the state-run Information and Decision Support Center that was published this week.

The report put the exports value at just $30.5 million in April compared with $160 million a year earlier.

Steadily declining gas production and foreign firms’ wariness about any increase in investment have combined with price subsidies and rising consumption to create Egypt’s worst energy crisis in decades.

The government has decided over the past year to divert most gas output to the domestic market.

Egypt’s new president, former army chief Abdel-Fattah al-Sisi, must now attempt to lure investors with a pledge not to break contracts and to offer attractive terms in future deals.

Oil Minister Sherif Ismail said in a statement Wednesday after meeting with officials from Italian energy major Eni that he had directed the heads of state-run oil company EGPC and other state-run energy firms to stay in “continuous communication with foreign partners to increase production rates.”

Ismail said last week that natural gas production would increase by 500 million cubic feet daily by December, when several gas fields are due to come on stream.

Disarray in the energy sector has worsened since the 2011 overthrow of Hosni Mubarak, in part due to Egypt’s inability to pay foreign firms for output.

Gifts of fuel from its Gulf allies have not included natural gas.

British gas producer BG issued a profit warning earlier this year, cutting production forecasts and serving “force majeure” notices to affected buyers and lenders.

Sisi swore in a new government Tuesday that he hopes will revive a sluggish economy and lure back investors including the energy firms needed to help boost gas production.

Egyptian gas exports began in the mid-2000s, but more than halved from 2008 to 2012 and have now slowed to a trickle.

Egypt relies heavily on gas to generate power, and shortages this year caused rare winter blackouts.

Many cities are now experiencing daily power cuts heading into the summer months, when consumption peaks.

 
A version of this article appeared in the print edition of The Daily Star on June 19, 2014, on page 5.

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Summary

Egypt's natural gas exports dropped 80.94 percent in April from a year earlier, according to the latest official statistics, as gas promised for export was diverted to meet a domestic energy crisis.

Gas production also fell 14.66 percent in April compared with a year earlier, according to a report by the state-run Information and Decision Support Center that was published this week.

Steadily declining gas production and foreign firms' wariness about any increase in investment have combined with price subsidies and rising consumption to create Egypt's worst energy crisis in decades.

Egypt relies heavily on gas to generate power, and shortages this year caused rare winter blackouts.


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