Egyptian Oil Continues To Slide, But Improvement On The Horizon
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According to local media reports, Egypt’s oil exports have continued to slide amid growing domestic and demand and local production that has suffered due to regional instability.
Citing the country’s Central Agency for Public Mobilization and Statistics, oil exports decreased by 38% during August, while imports continued to climb for the same period last year.
The results come as Egypt continues to try to address domestic demand and production challenges, including a substantial debt to foreign producers that grew to several billion over the last several years.
In addition to reducing unsustainable energy subsidies for domestic use, Cairo has moved to increase hydrocarbon production locally, including significant offshore efforts in hopes of eventually reducing costly dependence on foreign producers.
Most notably, the country announced in late August that Italy’s Eni had discovered a “super giant” offshore gas field that could potentially be home to 30 trillion cubic feet of gas, making it the biggest in the Mediterranean.
For Egypt, the successful development of the field would put them on track to join in on a burgeoning energy production push in the Eastern Mediterranean, previously led by Israel and, to some degree, Cyprus. Further, the field would play a significant role in supporting Cairo’s efforts to increase domestic energy production to meet surging domestic demand.
In recent years, Egypt has faced substantial challenges to meeting its energy needs as political and financial instability have threatened local production and made it difficult to afford costly imports without accruing large foreign debts. While small discoveries have provided Cairo with some momentum towards attracting the interest and investment necessary to move towards its energy goals, a discovery of this stature could be the key to overcoming any doubt among potential investors.
The successful development of any of the country’s oil or gas efforts would be a significant step forward for an economy that has suffered since the collapse of the government of Hosni Mubarak in 2011. With the dissolution of his government, the country’s economy has suffered amid financial and security uncertainty and often unmanageable energy sector debt.
The report did note that consumption of both oil and gas actually fell in September, sliding slightly below where it stood for the same period in 2014.
