CAIRO: Oil demand in Egypt is expected to rise 14 percent by 2013 from an estimated 671,000 barrels per day (bpd) in 2008 to 771,000 bpd, according to a report.
The latest Egypt Oil & Gas report forecasts that the country will account for 18.90 percent of Africa’s oil demand by 2013, while providing 6.03 percent of the supply.
“Oil exports are growing steadily in Africa because demand growth is lagging the pace of supply expansion, partially affected by the global financial crisis, the report said.
However, for Magdy Sobhy, expert at Al-Ahram Center for Political and Strategic Studies, the predicted 14 percent is not a drastic increase for oil demand in Egypt over the course of five years.
“In the past, growth of demand reached 7 to 8 percent, he said.
In 2007, Egypt was producing 664 bpd down from its highest record of 950 bpd in 1995, according to the Energy Information Administration (EAI), the US government’s official energy statistics.
“Even when the demand reaches the estimated 771,000 bpd level, Egypt will still be on the safe side on a few conditions, Sobhy, said, “Egypt needs to substitute oil with natural gas and expand the natural gas supply nationwide.
The sharp decline in Egypt’s car market in 2009, Sobhy believes, is a step in the right direction.
On the regional level, Africa was exporting an average of 4.86 million bpd in 2001. This total rose to an estimated 6.54 million bpd in 2008 and is expected to reach 7.70 million bpd by 2013, according to the report.
Sobhy said meeting the growing demand and cutting the subsidies for oil and gas products “is not an easy [task], therefore an alternative strategy by the government is needed.
Mohamed Aboul Enein, chairman of the People’s Assembly’s industry and energy committee, is not worried about the expected rise in demand.
“Recently Egypt found promising oil excavations particularly in the Western Desert, so the growing demand will be met by growing production, he told Daily News Egypt.
The report also expected the demand for natural gas in Africa to rise to 177 billion cubic meters (bcm) in 2013 from an estimated 107 bcm in 2008.
According to the report, Egypt consumed an estimated 30.28 percent of the region’s gas in 2008, and its market share is expected to be 23.46 percent by 2013. While it contributed an estimated 26.03 percent to regional gas production in 2008, by 2013 it is expected to account for 23.87 percent of supply.
Egypt has recently signed 60 contracts for oil and gas excavations, said Aboul Enein, even more positive than the figure is the potential production of these excavations.
“The government allowed the contracted [foreign] companies to drill to deeper levels, where the probability of findings is higher, he said, “this will reflect on the foreign partners’ share of the revenue.
Lately there has been debate on the subsidies allocated to petroleum and gas products, with some pushing for redirecting the gas subsidies to education and the healthcare.
“The new initiative by the Ministry of Finance to replace the old Taxis with new fuel-efficient cars will help in solving the problem, Sobhy said.
“We don’t know yet if the predicted demand level will affect the subsidies . it’s too early to tell, said Aboul Enein.
Egypt has reduced gas subsidies in the fiscal year 2009/2010 budget by 76 percent from LE 6.5 billion in FY 2008/2009.
Now the price for the natural gas is set at $2.65 per MBTU (million British thermal unit), according to Aboul Enein, and it might increase to $4.
Regarding OPEC s crude oil, the average price in Q1 2009 was an estimated $45.78/bbl, down 13 percent from the $52.51/bbl recorded during the previous three months, the report shows.
During the second quarter, there has been little change to the view of oil market developments. The report is forecasting an average OPEC basket price of $51/bbl, with the March gains being retained in April, before further recovery to a possible $57/bbl is seen by June. For 2009, the report is still assuming an average OPEC basket price of $52/bbl (-45 percent year-on-year).