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Egyptian-Russian economic rapprochement marked with wheat, LNG sectors - Daily News Egypt

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Egyptian-Russian economic rapprochement marked with wheat, LNG sectors

Russia sees Egypt as export destination after issues with EU following Crimea crisis, Egypt sees Russia as natural gas source

Russia, which is the fourth largest global exporter of wheat, was a constant supply of wheat for Egypt. (AFP Photo)
Russia, which is the fourth largest global exporter of wheat, was a constant supply of wheat for Egypt.
(AFP Photo)

Following former president Mohamed Morsi’s ouster in July 2013, Egypt sought closer ties with Russia after Washington suspended military aid. Close relations were marked by political talks, visits and economic discussions that were clearly manifested in the wheat and energy sectors.

Following an August 2014 meeting between President Abdel Fattah Al-Sisi and Russian President Vladimir Putin to discuss bilateral economic and political cooperation, Putin announced that Russia, the largest wheat exporter to Egypt, will supply the country with 5m tonnes of wheat throughout the year.

Russia, which is the fourth largest global exporter of wheat, was a constant supply of wheat for Egypt. In late December 2014, Russia announced it will impose unofficial restrictions on its grain export in 2015. The restrictions would address local high prices at a time when the country was facing a financial crisis linked to the decline in oil prices.

The global price of wheat increased to $25 per tonne since Russia announced imposing restrictions on exports of wheat, according to previous statements by Egypt’s Minister of Supply.

Egypt, the world’s largest wheat importer, consumes approximately 11m tonnes of wheat per year, 4m of which are obtained from local farmers. The remainder is imported from Russia, Ukraine, Romania, the US, France and other countries, according to chairman of the Grain Industry Chamber within the Federation of Egyptian Industries, Hesham Abou El-Dahab .

Wheat imports from Russia and other countries had been suspended in 2013 under the ruling of the former president Morsi’s administration, with then-supply minister Bassem Auda announcing reliance on the country’s domestic harvest. However, after Morsi’s ouster from power in July 2013, the interim government had gone back to importing wheat, saying that the Islamist president had depended on “false and misleading” data regarding local rates of production.

With regards to the energy sector, the Ministry of Petroleum and Mineral Resources signed a commercial contract in February with Russian company Gazprom for 35 liquefied natural gas (LNG) shipments, the ministry announced at the time.

Petroleum Minister Sherif Ismail said Egypt will gain access to Russian and Algerian LNG shipments at global prices, determined at the time of supply. The Egyptian Natural Gas Holding Company (EGAS) and Gazprom reached an agreement to continue supplying Russian LNG to Egypt during 2015. The agreement will allow for grace periods to repay the value of the debt.

Also, as part of the government’s efforts to provide the energy resources necessary for the country to operate power plants, a delegation from Algeria’s Sonatrach visited Cairo at the end of January to continue negotiations over shipments, which will be supplied from 2016 to 2020.

Russia’s oil and gas exports are valued at approximately $160bn annually, and is considered one of the world’s largest producers and exporters of oil and gas.

Russia exports gas to several European countries through pipelines that link the nations, including the Nabucco pipeline, which transports gas from Asia to the European Union countries through Turkey. The gas is stored in large warehouses in a border town in Austria, according to Vice President of the Egypt General Petroleum Corporation (EGPC).

Egypt launched a tender last October to import LNG from abroad to provide 40 LNG shipments annually.  Seven companies made offers, including British Petroleum, Vitol, Trafigura, Golar LNG, and three others. Norway’s HOG Energi announced last November that it signed a lease for five years with EGAS to supply a re-gasification boat to receive LNG shipments. The boat would be capable of converting the supplies to their gaseous state, and was scheduled to begin operations by the end of March.


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