What if the “Zohr” natural gas prospect is fully developed?

Scenario 1

In this scenario, all of the extracted natural gas is consumed domestically to meet household, electricity generation and industrial sectors’ demand:

1- Natural gas production in Egypt almost doubles in 2018, with an average additional 2.8 billion cubic feet of natural gas produced daily (1).

2- Egypt is able to reduce significantly the expected daily deficit of 3 billion cubic feet of natural gas in 2018 (2).

3- The energy bill deficit, currently at LE 1.7 billion, is significantly reduced as of 2018 (3); in the interim, Egypt remains reliant on gas imports to cover domestic demand.

4- Industrial capacity utilization increases, resulting in a GDP growth rate of 6 percent on average by FY2018/19, creating more jobs which reduces unemployment rate to below 10 percent during the same fiscal year(5).



Scenario 2

In this scenario, the government exports part of the extracted natural gas, with a more diverse supply of energy sources for domestic demand:

1- 29 percent of natural gas extracted is exported with the rest of production directed to cover part of the domestic demand (6).

2- Egypt’s electricity mix includes imported electricity, (7) coal used mainly by heavy industries, natural gas used by households and renewable energy sources (4).

3- Egypt regains its position as a net natural gas exporter, strengthening the Egyptian pound and increasing the net international reserves in the long run.

4- Export revenues are directed to improving electricity grids and investing in renewable energy sources.

5- Same GDP growth rate as scenario 1 is expected with a more diversified energy mix.





Reference:

(1) Based on estimates by Minister of Petroleum and Mineral Resources, Eng. Sherif Ismail.
(2) According to Robin Mills, Head of Consulting at Manaar Energy Consulting.
(3) According to a study by BNP Paribas (2015), the external energy balance for Egypt turned from a surplus of LE 5.1 billion in 2009/10 to a deficit of LE 1.7 billion in the first half of 2014/15.
(4) Based on “Energizing Egypt” from the Egypt Economic Development Conference , March 2015.
(5) Based on the government’s “Sustainable Development Strategy: Egypt’s Vision 2030”.
(6) ECES calculations based on 2009 natural gas production levels.
(7) Imported electricity from neighboring countries such as Saudi Arabia. Regional market integration in terms of energy is increased such as the Egypt-Saudi Arabia electricity interconnector.