CAIRO -

Rationalizing gas consumption and returning to the import of diesel fuel have spearheaded the Egyptian government's efforts to provide large quantities of natural gas and export it to Europe, which is experiencing a major energy crisis due to the Russian war in Ukraine.

The desire to rationalize and reduce gas consumption is supported by Egypt achieving a record in the export of natural gas, which amounted to 8 million tons in 2022, compared to about 7 million tons in the previous year, at a value of $ 8.4 billion, compared to about $ 3.5 billion in 2021, an increase of 140%, due to the increase in natural gas consumption. Prices in world markets.

This was confirmed by the Egyptian Minister of Petroleum Tariq Al-Mulla, who said in a televised interview that his country seeks to maximize its gas revenues in 2023 by rationalizing and reducing domestic consumption in order to increase the quantities exported.

Rationalization of consumption.. Did the plan succeed?

The Egyptian Ministry of Petroleum stated, in a report reviewing the results of harvesting its business last year, that it had succeeded in investing in the government's plan to rationalize electricity consumption - which was approved last August - in providing additional quantities of gas for export, in order to take advantage of the high international prices for this commodity.

This comes after Egyptian newspapers last week quoted a source in the Ministry of Electricity as saying that the frequent power outages in the past period, which Egyptians complained about, were according to an unannounced plan to rationalize consumption and save it for export.

According to the source, the Ministry of Electricity reduced loads to provide natural gas and diesel fuel (to operate power stations) for the first time since 2015, to obtain hard currency and save it in order to meet citizens' needs for basic commodities.

The plan included reducing the consumption of diesel and gas, and stopping the work of some electricity production and generation stations to save the electrical energy produced.

Back to diesel

In August 2022, Prime Minister Mostafa Madbouly revealed his government's plan to rationalize electricity consumption, which included stopping the external lighting of various government buildings and public squares, including the famous Tahrir Square in the heart of Cairo, and reducing street lighting and main axes.

According to Madbouly, a number of power stations were re-operated with locally produced diesel fuel instead of natural gas, which led to an export surplus of between $100 and $150 million per month, without having to take measures related to reducing electricity loads or reducing its consumption.

The Egyptian government has set its sights on achieving an average surplus of 15% of the volume of natural gas that is pumped to power stations in order to increase the volume of exports, and thus provide a hard currency for the state that enables it to relieve pressure as a result of the high prices of petroleum materials and main commodities.

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Tahrir Square is dark after implementing the Prime Minister's decision to rationalize electricity consumption pic.twitter.com/iMB6b8McVx

- Veto Gate (@Vetogate) August 9, 2022

Market coverage and increased production

Despite the increase in the demand for fuel in the local market by 6%, the Ministry of Petroleum secured the market needs of petroleum products and natural gas.

The total consumption of them amounted to about 81 million tons, an increase of 6.2% over the previous year, with 35.5 million tons of petroleum products and 45.6 million tons of natural gas.

Egypt's total production of petroleum wealth during 2022 amounted to about 79.5 million tons, with about 27.8 million tons of crude oil and condensate, about 50.6 million tons of natural gas, and 1.1 million tons of butane gas, in addition to butane gas produced from refining and manufacturing refineries.

Investing in the natural gas crisis in Europe

Professor of Petroleum and Energy Engineering, Ramadan Abu El-Ela, attributed the recovery in the export of large quantities of natural gas last year to several factors, "including the increase in production from gas fields in coordination with foreign partners, and the operation of the liquefaction stations in Damietta and Idku with the maximum possible capacity of 12 million tons." Take advantage of it all."

He explained, in his speech to Al-Jazeera Net, that there is a surplus as a result of the government's plan to rationalize the consumption of natural gas by rationalizing electricity consumption in government facilities, buildings, streets and hotels, and operating diesel power stations, indicating that the increase in electricity prices made some citizens rationalize consumption.

Abu El-Ela, who holds the position of Vice President of Pharos University in Alexandria, stressed that the plans to rationalize consumption did not directly affect the citizens, and are temporary in order to take advantage of the high prices of natural gas and benefit from its dollar revenues.

At the same time, he ruled out that resorting to the use of diesel fuel as a substitute for natural gas would cause significant environmental damage, especially since some European countries, such as Germany, reverted to using the most harmful coal for energy.

Abu El-Ela pointed out that the Egyptian liquefaction stations on the Mediterranean do not only work on Egyptian gas, but also on the gas they receive from the natural gas fields in Israel and Cyprus, which have no way to export to Europe except through Egypt.

Egyptian efforts to increase gas discoveries

In addition to measures to rationalize the consumption of electric energy, the Ministry of Petroleum succeeded during the past year in completing the implementation of 4 projects for the development and production of gas from the discovered fields with the aim of producing quantities of natural gas amounting to about 185 million cubic feet of gas per day, in addition to 1,000 barrels of condensate per day, at a total cost An investment of about $183 million.

In addition, 53 new oil and gas discoveries were achieved, consisting of 42 oil discoveries and 11 gas discoveries in the Western Desert, the Gulf of Suez, the Mediterranean Sea and the Nile Delta, with a new discovery of natural gas in the Maritime Nargis area in the Mediterranean, in which Chevron International invests.

A tripartite memorandum of understanding was also signed in Cairo under the umbrella of the Eastern Mediterranean Gas Forum last June between Egypt, the European Union and Israel, and aims to transport natural gas from Israel to Europe using Egyptian infrastructure and facilities.

Diesel.. back to back

On the other hand, economist Mamdouh al-Wali believes that the return to the use of diesel fuel in operating power plants instead of natural gas has side effects, including those related to increased environmental pollution and negatively affecting the lifespan of those stations that need more expensive maintenance.

He indicated, in statements to Al-Jazeera Net, that the percentage of diesel in electricity production had reached 25% in the year 2014-2015, and declined to less than 2% in the year 2020-2021 with the improvement of Egypt's position on natural gas production and its transformation into an exporting country, but with Returning to the use of diesel fuel had to import it again in hard currency.

Al-Wali believed that even if the price of natural gas that will be exported is higher than the diesel that will be imported, the government must take into account the negative impact of using diesel on the efficiency of electric stations, and the volume of carbon dioxide emissions harmful to the environment, which contradicts the government’s directions and the recommendations of the summit. Climate "Cop 27" (Cop 27) held in Sharm El-Sheikh at the end of last year.

Gas revenues exceed diesel imports

According to data issued by the Electricity Utility and Consumer Protection Regulatory Authority, the use of diesel oil recorded its highest level in 5 years in Egypt in order to increase its exports of natural gas, and the share of diesel oil in the total fuel used in power plants reached 21%.

Egypt's import of cheap Russian fuel oil increased to settle at 1.17 million barrels in June 2022, the highest level monitored by shipping data released by the global "Refinitiv" institution.

According to the standard European TTF index, burning diesel fuel is 4 times cheaper than burning natural gas, which enabled Egypt to achieve significant savings in natural gas to be exported to Europe and achieve dollar revenues that exceed diesel revenues.