New fuel prices in Egypt: How will it impact you?

Egypt's petroleum sector is undergoing significant changes, marked by recent decisions to raise fuel prices and efforts to increase oil and gas production. These measures are part of the government's broader strategy to stabilize the economy, meet domestic energy needs, and enhance Egypt's position as a key player in the global energy market.

Fuel price increases

On July 25, 2024, the Egyptian Ministry of Petroleum and Mineral Resources announced a second fuel price hike for the year, with increases ranging from 10 to 15 percent. This decision aligns with the government's plan to gradually eliminate fuel subsidies by December 2025. Here are the new prices:

• Diesel: Increased by 15% to EGP 11.5 per liter (up from EGP 10).
• Octane 80: Increased by 11.4% to EGP 12.25 per liter (up from EGP 11).
• Octane 92: Increased by 10% to EGP 13.75 per liter (up from EGP 12.50).
• Octane 95: Increased by 11.1% to EGP 15 per liter (up from EGP 13.50).
• Kerosene: Increased by 15% to EGP 11.5 per liter (up from EGP 10).
• Mazut for industrial purposes: Increased by 13% to EGP 8,500 per ton (up from EGP 7,500).

These price adjustments are expected to contribute to short-term inflation, despite the government's aim to reduce inflation to 10 percent by the end of 2024. The Central Bank of Egypt (CBE) projects that inflation will significantly decline by mid-2025 due to ongoing monetary policy tightening and favorable base effects.

Production increases and international partnerships

In a move to bolster oil and gas production, Egypt has signed a significant agreement with Italian energy company ENI SpA. This partnership focuses on increasing exploration, development, and production activities in Egypt. The agreement was reached during a negotiation session in New Alamein City and aims to leverage Egypt's strategic position as a regional energy hub. ENI plans to enhance its operations, develop existing fields, and introduce new exploratory projects.

Furthermore, Egypt is set to invest $1.2 billion in drilling 110 gas and oil wells in the fiscal year 2024/2025, with a longer-term plan to invest $7.2 billion in drilling 586 wells by 2030. This initiative is expected to significantly boost domestic production and reduce reliance on imports.

Addressing energy shortages and power outages

Egypt has faced notable challenges with natural gas shortages, leading to widespread power outages during peak summer months. To combat this, the government has allocated $1.18 billion to purchase necessary petroleum products and ensure steady gas supplies. This funding is part of a broader strategy to stabilize the national electricity grid and prevent future load-shedding.

In line with these efforts, the Gulf of Suez Petroleum Company (GUPCO) announced plans to invest $226 million in drilling five new petroleum wells in the North Safa and Al-Wasl fields. This project aims to develop a reserve surpassing 100 million barrels and increase daily production to 15,000 barrels by the second half of 2025.

Strategic vision and future goals

The recent developments in Egypt's petroleum sector are guided by a clear vision to enhance energy security, attract foreign investment, and support economic growth. Minister of Petroleum and Mineral Resources Karim Badawi emphasized the importance of modernizing the sector, adopting new technologies, and maintaining high safety and environmental standards.

The government's commitment to phasing out fuel subsidies and increasing production is also closely tied to its agreement with the International Monetary Fund (IMF), which includes measures to reduce the budget deficit and promote fiscal stability.

In conclusion, Egypt's petroleum sector is witnessing transformative changes aimed at boosting production, stabilizing the economy, and meeting the country's growing energy demands. The combination of fuel price adjustments and strategic investments in oil and gas exploration underscores the government's dedication to achieving long-term energy sustainability and economic resilience.