Nikos Tsafos
2015 The German Marshall Fund of the United States. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing
from the German Marshall Fund of the United States (GMF). Please direct inquiries to:
The German Marshall Fund of the United States
1744 R Street, NW
Washington, DC 20009
T 1 202 683 2650
F 1 202 265 1662
E info@gmfus.org
The views expressed in GMF publications and commentary are the views of the author alone.
GMF Paper Series
The GMF Paper Series presents research on a variety of transatlantic topics by staff, fellows, and partners of The German
Marshall Fund of the United States. Comments from readers are welcome; reply to the mailing address above or by e-mail to
info@gmfus.org.
About GMF
The German Marshall Fund of the United States (GMF) strengthens transatlantic cooperation on regional, national, and
global challenges and opportunities in the spirit of the Marshall Plan. GMF contributes research and analysis and convenes
leaders on transatlantic issues relevant to policymakers. GMF offers rising leaders opportunities to develop their skills and
networks through transatlantic exchange, and supports civil society in the Balkans and Black Sea regions by fostering democratic initiatives, rule of law, and regional cooperation. Founded in 1972 as a non-partisan, non-profit organization through
a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides
of the Atlantic. In addition to its headquarters in Washington, DC, GMF has offices in Berlin, Paris, Brussels, Belgrade,
Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm.
About the Foreign and Security Policy Program
GMF contributes to enhancing cooperation between North America and Europe by actively strengthening civil society and
democratic institutions in Europes post-communist countries. GMFs Eastern Mediterranean Energy Project addresses the
political and economic implications, risks and opportunities of the recent energy discoveries in the Eastern Mediterranean
region. It aims to promote the conditions for the peaceful development of the new energy opportunities in the Eastern
Mediterranean and to promote regional cooperation on energy issues. See more at: http://www.gmfus.org/forum/easternmediterranean-energy-project.
Cover photo: LNG tanker passing through Suez Canal. HHakim/istockphoto
Nikos Tsafos1
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Egypts Energy Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Egypts Supply and Demand Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Role Will Imports Play in Egypts Market? . . . . . . . . . . . . . . . . . . . . . . . . 7
The Future of Egyptian Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
1
Nikos Tsafos is president and chief analyst at enalytica, a company he co-founded in 2014 to transform how the energy
industry finds and uses information. He was previously with PFC Energy, where his portfolio included managing the global
gas consulting practice and leading the firms research on global gas.
This policy paper was original published in July 2015 and updated in October 2015.
Preface
iii
1
Reserves were 17.3 billion barrels of oil equivalent in 2014, of
which 75% was gas (Gas converted to barrel of oil equivalent
using a conversion of 6,000 cubic feet to one barrel). Energy
Information Administration, International Energy Statistics,
Petroleum and Natural Gas Reserves for 2014.
2
International Energy Agency (IEA), Statistics Search, http://
www.iea.org.
3
Ibid.
5
EGPC Put In Charge of Future LNG Imports, Daily News
Egypt, Tuesday, March 31, 2015; Egypt to import $3.55 bln
worth of LNG in 2015-2016, Reuters, April 14, 2015.
7
Unite Nations, Population Prospects: 2012 Revision, http://esa.
un.org/wpp/.
10
11
12
Egypt, Ministry of Planning, Fourth Quarter 2013-14 Indicators, October 14, 2014, http://www.mop.gov.eg/.
13
14
15
16
17
18
21
22
19
23
BP, Form 10-K, 2010. Various reports put the price at $4.10/
MMBtu. The changes in governance structure were reportedly
a switch from a Production Sharing Contract to a tax and royalty
system. BP, BP Finalises Deal to Develop Egypts West Nile
Delta Gas Fields, Press Release, March 6, 2015.
24
20
25
26
27
28
29
30
31
32
Meeting domestic
demand, especially in
the power sector, should
be the top priority in
government policy.
Source: enalytica
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
Ibid.
10
48
49
50
51
52
Union Fenosa Gas Annual Report 2013, https://www.unionfenosagas.com/. UPDATE 2-Egypt wants arbitration resolved to
allow gas exports from Israel, Reuters, May 14, 2014.
54
11
In enabling investments,
which could eventually
exceed $10 billion,
the challenge is to
balance risk and reward
and diminish various
commercial, political,
and legal risks.
55
See Anastasios Giamouridis and Nikos Tsafos, Financing Gas
Projects in the Eastern Mediterranean, The German Marshall
Fund of the United States, July 2015, http://www.gmfus.org/
publications/financing-gas-projects-eastern-mediterranean.
12
13
Appendix
2012
Growth
% Growth
2000=100
Population in millions
GDP (2005 US$ billion)
per capita
80.7
125.9
1,560
14.6
50.5
419.7
1.7%
4.4%
2.6%
122
167
137
66.1
75.4
1,140
Primary Energy Production by Fuel (in thousand tons of oil equivalent ktoe)
Crude oil
Natural gas
Total
36,108
14,432
53,090
34,968
44,184
82,046
-1,140
29,752
28,956
-0.3%
9.8%
3.7%
97
306
155
8.7%
3.8%
1.7%
-0.2%
-5.8%
21.9%
8.3%
5.6%
3.8%
271
157
122
98
49
1,075
262
192
156
4.9%
2.6%
4.9%
6.8%
7.6%
20.8%
1.7%
4.9%
177
136
178
220
242
967
122
178
14,432
22,845
1,306
1,178
923
12
-13
40,683
0.62
39,120
35,808
1,594
1,149
448
129
-34
78,214
0.97
24,688
12,963
288
-29
-475
117
-21
37,531
0.35
9,574
9,851
6,686
3,203
1,205
294
667
31,480
16,981
13,358
11,910
7,062
2,913
2,842
814
55,880
7,407
3,507
5,224
3,859
1,708
2,548
147
24,400
41,996
22,313
13,697
124,550
24,959
13,358
82,554
2,646
-339
9.5%
0.9%
-0.2%
297
112
98
137
1,260
1,123
20.3%
920
0
78,143
237
164,364
237
86,221
n/a
6.4%
n/a
210
14
OFFICES
Washington Berlin Paris Brussels
Belgrade Ankara Bucharest Warsaw
www.gmfus.org