Tumultuous times post-Revolution disrupted tourism and investment, thus draining the country’s foreign currency reserves. FX shortages caused mounting arears to international oil companies (IOCs) that deterred new drilling and production investment, resulting in the worst energy shortages in a decade. As demand for energy continued to rise, Egypt turned from a natural gas exporter to net importer.
As per Egypt’s $12bn IMF loan agreement, economic reforms are supporting renewal in oil and gas exploration and supply deals previously delayed by political upheaval. Egypt has begun redefining its energy subsidy system, historically consuming c. 20% of the country’s GDP and hindering the state’s ability to pay IOC dues. Lifting energy subsidies and paying down debt as part of the IMF loan agreement, plus ever-increasing demand for natural gas, is bringing investors back to Egypt.
Egypt is the largest non-OPEC oil producer in Africa and the second largest dry natural gas producer on the continent. The country also has a strategic position in oil transfer because of its operation of the Suez Canal and Suez-Mediterranean Pipeline. The Zohr “supergiant” gas field discovery, the largest ever discovered in the Mediterranean, could transform Egypt’s energy industry. With offshore pricing reforms now encouraging investment, new entrants to the market are expected. Egypt could return to self-sufficiency, even start exporting in 2019, given new natural gas discoveries near the Zohr field by 2017 year-end.