Energy becomes the key to driving economic growth in Egypt

Egypt now faces many problems, such as population growth and increasing energy demand. In order to meet its development goals, the domestic energy industry must increase production capacity to keep pace with demand. Egypt’s economic development depends heavily on energy, with manufacturing and tourism accounting for about 25% of the country’s GDP. It is no exaggeration to say that energy, especially the electricity and oil and gas industries, is the key to driving economic growth in Egypt.

In 2011, Egypt produced a total of 147 billion kWh of electricity, of which 131 billion kWh was used and the remaining 16 billion kWh was lost in the transmission and distribution process. Among them, 75% of electricity supply comes from natural gas, petroleum generation accounts for 14%, Aswan Dam hydropower generates 9.7%, and the remaining 1.2% comes from wind power and solar power.

In 2010, Egypt was the second largest natural gas producer in Africa, second only to Algeria. It ranks 12th in the world, producing 2.2 trillion cubic feet of natural gas and 1.6 trillion cubic feet of consumption. According to data released in 2012, Egypt's natural gas reserves are 78 trillion cubic feet. Most of the oil and gas discoveries are concentrated on the Mediterranean coast and the Western Sahara. Continuous oil and gas discovery proves that Egypt's technology in the field of oil and gas exploration and development is maturing.

Ten years ago, the Egyptian government decided to export natural gas and use oil to generate electricity to improve the economic activity of Egypt. This is not a wise decision. Liquefied natural gas production and transportation have higher costs, and exporting natural gas to Europe and the United States does not bring much economic benefit to Egypt. The year-round constant contract price is enough to illustrate this point. The price of natural gas exported from Egypt to Israel is even lower than the market price, and most of the natural gas exports to Jordan, Syria and Lebanon are still in existence. This phenomenon continues to this day.

There is no doubt that Egypt's natural gas policy must change. In today's ever-growing demand for natural gas, satisfying domestic demand is the government's priority. Egypt should reduce or stop gas exports. For Egypt, as a fuel, natural gas is obviously much better than oil. In particular, heavy oil fuel also brings about a lot of pollution. More use of natural gas for power generation is also of great significance for improving the power production capacity and reducing costs. The position of oil power generation in Egyptian electricity supply should be replaced by natural gas as soon as possible. Egypt needs to increase its electricity supply, and this part of the increase in electricity should come from natural gas and renewable energy. Of course, considering the distribution of energy in Egypt, natural gas is obviously the best choice.

Oil policies also need to change. Most of Egypt's oil fields are located in the Suez and Western Sahara deserts, with production of 260 million barrels in 2011. In 2012, Egypt announced reserves of 4.4 billion barrels of oil. With the continuous discovery of new oil fields, this figure is also rising. From 2003 to 2011, Egypt extensively used petroleum and its processed products, and its oil consumption surged by 40%, exceeding the Egyptian oil production. So Egypt became a pure oil importer and had to import large amounts of oil, gasoline, diesel and other fuels every year. The new oil discovery can certainly increase Egypt’s oil production, but reducing its reliance on petroleum products is fundamental to helping Egypt get out of the status quo. In addition to natural gas, biofuels should also be more widely promoted. This not only meets the development goals of Egypt, but also can leave behind some more oil resources.

Nuclear power is still a blank in Egypt. The government is restarting plans to build a nuclear power plant on the northwest coast. The nuclear power plant will be completed as early as 2019. Although this may seem far away, it is good news for Egyptian nuclear power supporters. However, opponents of nuclear power have also been calling for the government not to use nuclear power on the grounds that Egypt lacks sufficient water resources for the use of nuclear power plants, and the problem of nuclear waste disposal is also difficult to solve. It is an indisputable fact that Egypt is facing a shortage of power supply. Whether nuclear power should be used or not and how it affects Egypt’s power security are still under discussion. In any case, the choice of nuclear power for Egypt is somewhat risky.

Hydropower has always had a very stable position in Egypt's electricity supply. Although Egypt has had many frictions and controversies with the countries of the Lower Nile, hydropower has provided Egypt with a steady stream of electricity over the past 40 years. How to reduce the waste of water resources may be a major problem that Egypt needs to solve. It is equally important to handle disputes with downstream countries.

Among renewable energy sources, solar energy is clearly the most potential. The 140 MW power station built by the government in Kuraymat is the first solar power plant in the Middle East and North Africa region and is also an important part of the “Desert Solar” program led by Germany. Having a mature and sustainable development policy is crucial to the development of the Egyptian solar energy industry. The Egyptian solar energy industry has emerged in the past few years. The government should seize the opportunity to allow solar energy to account for a larger proportion of Egypt’s future electricity supply.

Faced with the severe power supply situation, only the development of a reasonable energy policy can better stimulate economic development. For the current Egypt, it is important to encourage clean energy development, rationalize energy supply, and increase energy efficiency. Only by doing this can Egypt have a bright future.