- The European Union (EU) is consolidating its role as a major oil and gas customer in North Africa. In particular Egypt's vast gas resources are catching the EU's attention. A visit to Egypt by the EU Commissioner in charge of energy is to "boost transport and energy cooperation across the Mediterranean."
Loyola de Palacio, Vice-President of the European Commission in charge of energy and transport, is visiting Amman, Jordan, and Cairo, Egypt, starting tomorrow. The main objective of this official visit is to "discuss the development of the region's oil, gas, electricity and transport sectors in the framework of Euro-Mediterranean cooperation and the European neighbourhood Policy," according to an EU statement.
In Egypt, Ms de Palacio will meet Prime Minister Ahmed Nazif, Petroleum Minister Sameh Fahmy and several other Egyptian cabinet members in charge of energy, aviation, transport and cooperation. During the high-profiled visit, the EU Commissioner hopes to bind Egypt closer to the EU's oil and gas market.
- The meetings will concern the increasingly important role Egypt will play in the development of a regional oil and gas market, particularly as a future supplier of gas resources to the EU, the EU statement issued today said. In particular Egypt's increasing gas resources are important to the nearby Europeans.
Discussions in Cairo were also cover the continuing reform of the Egyptian energy sector and the promotion of new and renewable energy sources such as solar and wind power. The harmonisation of the Mashrek (Egypt, Jordan, Lebanon and Syria) electricity market, as well as the trans-Mashrek gas market would also be covered at the meeting.
Also in Jordan, a net oil importer, Ms de Palacio was to focus on regional energy policies. The meetings in Amman were to concern the key role of Jordan in the development of a regional oil and gas market, and its "key role as a future transit country for gas resources to the EU." Discussions were also to focus on "enhancing the security of energy supplies" and on the ongoing reforms in the Jordanian energy sector.
Egypt, which has exported petroleum since the 19th century, for most of its oil history has seen Europe as its main market. An increasing domestic demand and maturing oil fields in the Gulf of Suez have however made Egypt's oil exports decreasing rapidly since their peak in 1996. If current trends continue, Egypt could actually become a net oil importer by 2010. Large investments in explorations however seek to turn this tide.
While the EU has some interest in Egypt's insecure future oil exports, greater expectations are attached to the current boom in Egyptian gas production. Large investments in the sector are now turning Egypt into a major exporter of liquefied natural gas (LNG). So far, much of Egypt's gas production is consumed locally or sold to neighbouring Jordan, but large export schemes towards Europe are underway.
European companies are already strongly involved in Egypt's gas sector, although production is dominated by US companies. The Spanish company Union Fenosa is building two LNG facilities in the country, aimed at exporting LNG to Spain and other EU countries. Also Italian companies are involved and there are plans to build an import terminal for Egyptian LNG in Brindisi, Italy.
Egyptian Petroleum Minister Fahmy recently told journalists that his country was looking at gas markets in North America, Europe and the Middle East. He however emphasised that the EU was a lucrative market for nearby Egypt as demand for imported gas was growing.
Throughout Europe, in particular in the Union's new eastern members, coal-fired power plants are being phased out and gas plants are seen as their environmentally preferred successors. Current EU gas imports are mostly from Russia, Norway and North Africa, excluding Egypt. While other North African and Norwegian reserves are limited, new Russian deliveries would be costly due to transport.
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