Rachid back from successful China trip; Fahmy says OPEC working to stabilize oil prices
CAIRO: Egypt is set to receive $700 million in Chinese investments over the next 18 months, including at least $300 million for a new aluminum factory in Ismailia, Minister of Trade and Industry Rachid Mohamed Rachid said on the closing day of the Euromoney Egypt Conference.
Fresh back from a nine-day trip to China, where he was joined by an Egyptian businessmen delegation to participate in the World Economic Forum s China Business Summit, Rachid said agreement had been reached with Citic Group to construct an $800 million aluminum plant. Eight-five percent of the project will be financed by Citic, China s largest public-sector company with nearly $90 billion in assets, and 15 percent contribution will come from Egyptian banks.
The new venture will bring much needed FDI to Egypt and much needed aluminum to the world s largest consumer. The plant is expected to reach a maximum export production capacity of 270,000 tons per year by 2011, most of which will be sourced to China.
Rachid says Egypt s shift to China from Western economies was inevitable as a result of market forces. He expects annual trade with the China to reach $5 to $6 billion in six years, compared with $2.3 billion now.
Our traditional relations were with Europe and the U.S., he told the International Herald Tribune. What is happening now is diversification. More and more, China is seeing Egypt as a gateway to Europe, the Middle East and Africa.
Free trade agreement (FTA) talks broke down with the U.S. after a series of what the U.S. identified as political setbacks to President Hosni Mubarak s promises for political reform, namely widespread fraud and voter intimidation in last September s presidential elections, November s parliamentary elections and the imprisonment of El-Ghad opposition leader Ayman Nour.
At the closing session of the conference s Monday schedule, Minister of Petroleum Sameh Fahmy said the ministry continues to direct its efforts to securing more foreign funding for exploration projects in the natural gas sector. He added the Organization of Petroleum Exporting Countries (OPEC) is working hard to counter global fears of the rising oil prices, which have lead to the sharp rise past $70 per barrel, and continuing instability in supply.
Oil and gas exports reached $10 billion last year. Liquefied natural gas (LNG) exports made up 30 percent of that figure, according to the Ministry of Petroleum (MOP).
Speaking on the sidelines of the conference, Hany Soliman, MOP undersecretary for gas affairs, said the ministry has secured 80 natural gas drilling agreements worth $10 billion. Some have already started drilling, while others are due in 2007, he says. New drilling has the potential to bring Egypt s total reserves of natural gas to 100 trillion cubic feet (TCF) by 2011. According to MOP figures, the country s reserves now stand near 70 TCF and supply nearly 85 percent of the country s power generation.
Our plans are to increase gas production levels, and we know we can do this without exhausting the gas reserves we have, says Soliman without specifying the production goals. Many fields that have huge capacities are not tapped yet, he says, adding Egypt will maintain its oil production at current levels.
Soliman did not comment on the ministry s talks with LNG producers which are expected to conclude with a decision to raise local consumer prices. Earlier, Prime Minister Ahmed Nazif addressed the complaints of producers, lead by British Gas, by promising to commission a committee to study current market prices and ways they could be raised to keep up with global levels. Still, Nazif promised the price of residential supplies of LNG would not be affected.