The Potential of Egypt-U.S. Bilateral Cooperation in Oil and Gas

On January 14, Minister of Petroleum Sameh Fahmy was the guest of honor at a general meeting and luncheon hosted by the American Chamber of Commerce in Egypt, held at the Cairo Marriott's Aida Ballroom. AmCham Egypt president Taher Helmy introduced the minister, praising his efforts aimed at attracting international gas companies to Egypt's petroleum sector. Helmy added that Egypt could soon look forward to exporting large quantities of natural gas to the markets of Europe and the US.

The minister began his speech with a brief historical overview of the local petroleum industry going back to 1964, when the country's first oil exploration operations were launched. Over the course of the last 30 years, he explained, 293 concession agreements were signed, 44 percent of which were with US companies. This was reflected in export receipts: in the 1988/89 fiscal year, the minister said, petroleum exports to the US were worth $44 million, while in 2002/03, they stood at $157 million.

Fahmy went on to explain that - despite the popular misconception that revenue is split 50-50 between foreign companies and the state - Egypt's share of that revenue was some 76 percent.

The minister also said that Egypt's production capacity had increased noticeably in recent years, rising from 24.6 million barrels a day in 2002 to 32 million last year.

In terms of Egypt's ace-in-the-hole, natural gas, Fahmy was no less optimistic. He explained that, recently, their had been a dramatic rise in the country's total proven gas reserves, adding that negotiations for natural gas contracts were ongoing with Spanish, French and US companies (although the minister reiterated Egypt's policy of never contracting out more than one-third of the country's total reserves).

Fahmy pointed out the importance of the landmark inauguration of the much-celebrated Egypt-Jordan LNG (liquefied natural gas) pipeline last year, and added that the Damietta and Rashid LNG complexes, currently under construction, would be among the largest in the world.

The minister went on to highlight Egypt's current "six-years-from-discovery-to-export" strategy, predicting that by 2006, the country would be ranked the sixth largest natural gas producer in the world. "Our goal is to have exported 20,000 tons of natural gas by 2010," he said.

The minister expressed his hope that, as natural gas gradually takes the place of oil as the primary energy source globally, Egypt would enjoy its share of growing - mainly US - demand, and encouraged American companies to continue their longstanding cooperation with Cairo. "We invite US investors - along with other investors - to participate in the future of the local sector," he said, suggesting that, "Egypt can become a hub for energy resources to the United States."

Fahmy wrapped up his talk by rattling off Egypt's many advantages vis-à-vis petroleum production and export, including long-term political and economic stability; a perpetually developing investment climate; Cairo's clear-cut policies; and formidable national infrastructure.

Helmy concluded the event by presenting the minister with an honorary membership to AmCham.