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With new gas deals, Egypt closes in on energy hub goal

Egypt is set to inaugurate a new wharf for natural gas and petroleum product tankers on the Gulf of Suez in the coming days, another step in its plan to become a regional energy hub.

The new 2.5km wharf is being built by SUMED, which for decades has operated two pipelines from the Red Sea to the Mediterranean.

The wharf will have three berths to receive natural gas and petroleum products carriers. It is due to be completed by the end of the month, Al-Masry Al-Youm newspaper quoted SUMED chairman Mohammad Abdul Hafez as saying. Abdul Hafez confirmed the remarks in a text message to Reuters.

The country has been building fuelling depots for ships along the Suez Canal and expanding its refining capacity. It has an extensive pipeline network and two idle gas liquefaction plants ready to export new gas as it arrives.

It is also building nine 300,000 cubic metre petroleum storage tanks and loading and offloading facilities. The tanks are due to be completed by the end of 2018, Abdul Hafez said.

NBK-Egypt provided $300 million in financing for the project, the bank said in May.

The country believes its strategic location straddling the Suez Canal and the land bridge between Asia and Africa and its well-developed infrastructure will help turn it a trading and distribution centre for countries in the region and beyond.

A slew of announcements of new gas production and the expansion of its infrastructure have helped advance the plan.

Italy’s Eni this month delivered the first gas from Egypt’s giant offshore Zohr field, whose estimated 30 trillion cubic feet (tfc) makes it the biggest gasfield in the Mediterranean, and BP delivered the first gas from another offshore field, Atoll, north of Port Said.

Egyptian President Abdul Fattah Al Sissi’s government has announced the hub approach part of its energy policy, but still faces logistical and political obstacles to its goal.

“By the beginning of 2021, Egypt will be a main regional hub for gas and crude oil,” Petroleum Minister Tarek El Molla told a press conference last month.

Cheap supply route

Energy analysts say the cheapest way for Egypt’s neighbours to send their gas supplies abroad would be through Egypt’s two unused liquefaction plants, but this is complicated by legal and logistical problems or by financial constraints.

“The lack of a political framework between all these countries is still an obstacle,” said Riccardo Fabiani, a Middle East and North Africa analyst at Eurasia Group.

Al Sissi on November 20 also visited Cyprus, where he discussed construction of a pipeline to deliver gas to Egypt from Cyprus’s Aphrodite field, and a delegation representing Israel’s Tamar gasfield came to Cairo to discuss possible imports into Egypt.

Officials from Exxon Mobil have also recently held talks with Egypt to discuss investments in oil and gas.

The challenge with Cyprus’s 4.5 TCF Aphrodite field is mainly economic. At current gas prices, it is not big enough to justify an undersea pipeline to Egypt unless more discoveries are made elsewhere in Cyprus, analysts say.

Alternative routes for Egypt’s neighbours, such as direct pipelines to Turkey, Greece or Italy, could be prohibitively expensive because of the depth of the seabed.

“Egypt is the least bad candidate. And it is also going very fast, which gives it a head start,” Fabiani said.

Source: Gulf Times

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