APPENDIX IV. 1
Current and Prospective Gas Exports
Five major gas projects, currently at varying stages of implementation, are expected to raise Egypt’s gas exports to approximately 21 billion cubic meters per annum by 2008. At current prices (US$126 per thousand cubic meters), this would result in gross annual inflows of about US$2.7 billion (3.1 percent of GDP).
(i) Gas exports to Jordan via an undersea pipeline started in mid–2003. This first phase of the Arab Gas Pipeline project feeds a power station in Aqaba. Gas exports amounted to US$60 million in 2003/04 and are projected at US$80 million in 2004/05. A 30–year agreement envisages export volumes rising from the current level of 1.1 billion cubic meters per year (bcmy) to 2.3 bcmy by 2010/11. Construction of the next phase, an extension of the pipeline to Lebanon and Syria, is scheduled to begin in 2005. The pipeline should eventually reach Cyprus and Turkey, after which it could be connected to the European gas grid.
(ii) An agreement to sell gas to Israel via an off–shore pipeline was approved in principle in May 2004. The government of Israel endorsed the Memorandum of Understanding (MoU) in February 2005. Under the MoU, the state–owned Israel Electric Corporation would buy 1.2 bcmy of Egyptian gas from July 2006, rising to 1.7 bcmy one year later under a 15–year contract, with an option to extend the agreement for a further five years.
(iii) Exports from an LNG plant at Damietta, on the Mediterranean coast, started in January 2005. Union Fenosa of Spain and ENI of Italy built the plant at a cost of US$1.3 billion. The plant is owned by Spanish Egyptian Gas (SEGAS), a consortium in which Union Fenosa has an 80 percent share. The EGPC and the Egyptian Holding Company for Natural Gas (EGAS) each own a 10 percent share. Union Fenosa has a 25–year contract to buy the equivalent of 4.4 bcmy of natural gas from the Damietta plant. British Gas is taking a further 1 bcmy and discussions are advanced with a buyer for the plant’s remaining output of LNG (equivalent to 2.2 bcmy of natural gas).
(iv) Production at another LNG plant, at Idku, east of Alexandria, is scheduled to begin in the third quarter of 2005. British Gas and Petronas of Malaysia built the $1.1 billion plant and Gaz de France has committed to buy its output (equivalent to 5 bcmy of natural gas) under a 20–year contract. Gaz de France, British Gas, and Petronas form the bulk of Egyptian LNG, the consortium that owns the Idku facility. EGPC and EGAS have a combined stake of 24 percent.
(v) A second production train under construction at Idku is due to come on stream in mid–2006. Up to six LNG trains (independent production units for gas liquefaction) can be accommodated at Idku, compared with two at Damietta. The second train is the same size as the first train and will cost around US$900 million to construct. British Gas has signed on to purchase the output of this train.
International Monetary Fund, 2003, “Foreign Direct Investment Statistics: How Countries Measure FDI 2001, (Washington: International Monetary Fund).
Prepared by Geert Almekinders. The author would like to thank officials from the Ministry of Petroleum for helpful discussions during the staff visits.
The Egyptian authorities do not publish regularly time series data on oil production, and the annual report of the state–owned Egypt General Petroleum Corporation (EGPC) has limited circulation. Staff received data for the period 1995/96-2003/04, as well as the 2002/03 Annual Report of the EGPC from the Ministry of Petroleum. Data published by the International Energy Agency and in British Petroleum’s Statistical Review of World Energy differ considerably from the EGPC data, possibly reflecting different treatments of condensate and Liquefied Petroleum Gas (LPG).
A trillion cubic feet is equivalent to approximately 1,848 billion cubic meters.
While these estimates and their recording appear methodologically sound, the CBE has no alternative data sources against which to compare the estimates it obtains from this methodology.
The CBE estimates record the difference between a headcount-based estimate of tourism-related inflows (US$5.5 billion in 2003/04) and the estimates obtained from the ITRS (US$2.3 billion in 2003/04) as an outflow in the capital account. The estimates in Table 3 record only the flows based on direct estimates of tourist arrivals with the errors and omissions line offsetting any upward bias implicit in these estimates. The balance of payments in Table 7 of the staff report for the 2005 Article IV consultation follows the same methodology.
The reclassification of profit remittances from the “Other” category to the Investment Income category under service payments leaves the total for service payments unchanged.