Oil Egypt accountACCOUNT King Tut

Qalaa Says New Oil Refinery will Cut Government's Import Bill

Source: Reuters 5/25/2016, Location: Egypt

Share |
Egyptian investment firm Qalaa Holdings is confident its new refinery will cut the country's dependence on crucial oil product imports, particularly as a weaker currency and rising crude prices force the government to reduce its energy bills.

The $3.7 billion Egyptian Refining Co (ERC) will have the capacity to produce 4.2 million tonnes of refined products annually, which ERC will sell to state-controlled Egyptian General Petroleum Corporation (EGPC) at international prices under a 25-year agreement.

Qalaa owns a 19 percent stake in ERC, which is expected to become operational in the first quarter of 2017.

Egypt, which has turned from a net energy exporter to an importer because of declining domestic production and the burden of costly subsidies, aims to end gasoline and possibly gasoil imports by 2019.

The country is suffering from a shortage of hard currency and Qalaa chairman Ahmed Heikal said ERC will be exposed to EGPC's dollar shortages. However, he said there were provisions in the contract that would allow a rolling letter of credit for oil products that cover the three months going forward.

"You have to remember what is the alternative for the government? The alternative is to import. So they will have to pay cash for the products," Heikal told Reuters.

Egypt's economy has struggled since the fall of President Hosni Mubarak in 2011 and its tourism industry, a key source of dollar revenues, has faced a string of crises, the latest being last week's EgyptAir plane crash.

ERC will convert 3.5 million tonnes of heavy residue from the refining process at the nearby CORC plant to higher-value products like diesel and gasoline. Heikal said ERC will additionally import 10 million barrels of crude a year, with a preference for Saudi Arabia's Arab Medium.

Heikal said he is "cautiously optimistic" on the medium-term outlook for the Egyptian economy, especially in light of recent gas discoveries.

Egypt used to produce 96 percent of its electricity through natural gas, but as a result of the decline in natural gas production, its power stations have had to increase the amount of fuel oil they burn, Heikal said.

Italy's Eni made a huge natural gas discovery at the offshore Zohr field last year that is expected to come onstream in 2018 making Egypt self-sufficient in natural gas by 2020.

By that time, ERC would then be able to upgrade any excess fuel oil to higher-quality refined products, Heikal said.

As oil prices more than halved between mid-2014 and early 2016, Egypt's subsidy bill fell sharply, but the recent recovery in prices is weighing on public coffers once again.

Egypt now spends $795 million per month on imports to meet its energy needs, according to the petroleum ministry.

Heikal said the government would have "no other choice" but to raise subsidies, even if it is at a gradual pace.

For more information about related Opportunities and Key Players visit Egypt Oil and Gas Projects

Egypt >>  1/11/2018 - The World Bank's Multilateral Investment Guarantee Agency (MIGA) announced that it will provide Egypt with $102.6 million in credit facilities to supp...
Egypt >>  1/11/2018 - ADES International Holding Ltd. (ADES), the London-listed company providing offshore and onshore oil and gas drilling and production services in the M...

Egypt >>  1/10/2018 - Eng. Tarek El Molla, Minister of Petroleum and Mineral Resources received Mrs. Maria Moraeus Hanssen, CEO of the German company DEA and the accompanyi...
Egypt >>  1/10/2018 - TransGlobe Energy Corporation (TGL) (TGA) (“TransGlobe”) announces the 2018 capital budget and promotions. All dollar values are expressed in US dolla...

Egypt >>  1/8/2018 - The Minister of Petroleum and Mineral Resources, Tareq Al-Mulla, appoints Ali Fuad Badr as the Chairman of the Board of Directors of Amerya Petroleum ...
Egypt >>  12/28/2017 - 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 ...

Related Categories: Camp Building  Cleaning Equipment, Services  Construction Contractors  Corrosion Products/Services  Diving Contractors  Exploration  Food Supplies  General  Labor Services  Maintenance and Repair  Offshore/Onshore Construction  Oil & Gas Companies  Pipeline Services  Safety Services  Service Companies  Skilled Labors  Subsea Production  Transportation, 4X4 Trucks  Unskilled Labors  Utility Systems  Water Supply Services  Welding Products/Services 

Related Articles: Construction Contractors  Exploration  General  Labor Services  Maintenance and Repair  Offshore/Onshore Construction  Oil & Gas Companies  Pipeline Services  Safety Services  Subsea Production 

More News

Oil & Gas Projects in Egypt >>

Oil & Gas Companies in Egypt >>

Related Links

Oil Egypt E-Marketplace - Subscription Packages - Benefits

Copyright © Universal Solutions S.A.E. All rights reserved. Privacy Policy. - Career Opportunities - Feedback - Contact Us