CAIRO: Egypt’s oil and gas sector topped other sectors in terms of growth for the fiscal year ended June 2009, Minister of Petroleum Sameh Fahmi announced Thursday.
According to the minister’s statement, growth in the oil and gas sector accounted for 17.5 percent of Egypt’s economic growth during fiscal year 2008-2009, compared to just 8.3 percent during the previous fiscal year.
Continued foreign investment in the sector throughout the economic crisis has bolstered healthy growth rates in oil and gas.
Foreign investments in prospecting doubled during the past fiscal year from 33 percent to 67 percent.
Fahmi attributed this upward trend to the policies and strategies adopted by the Egyptian government to ease the impact of the global recession.
Despite the sector’s impressive growth numbers, oil and gas exports have been hard hit by the economic crisis.
The Council of Ministers Information Center monthly report, released last week, indicated a year on year decline of 64 percent for June 2009 in the value of crude oil and petroleum product exports.
Meanwhile, the total value of crude and petroleum exports fell from $822 million in June 2008 to just $229 million this past June.
According to Magdy Sobhy, an economics expert at the Ahram Center for Political and Strategic Studies, dropping export levels have more to do with prices than quantities.
“The lower numbers we’re seeing are indicative of the impact the crisis has had on oil and gas prices. The drops in export levels are mostly due to prices, which have fallen about 55 percent since the beginning of 2008, not quantities produced, he said.
“As prices begin to recover we will see a corresponding improvement in sector export levels, he continued.
Despite the drop in the value of oil exports and imports, the oil sector has succeeded in achieving a surplus in the oil trade balance of nearly $5 billion, according to the report.
Though natural gas exports have fared better during the crisis due to higher demand and Egypt’s status as a major supplier, year on year statistics published in the report paint a grim picture of that sub-sector as well.
The value of natural gas exports fell 46 percent year on year, while the value of exports fell from $384 million to $200 million for the fiscal year ended June.
Recent plans by the Ministry of Petroleum to increase exports, however, could indicate a recovery of natural gas export levels in the coming months.
According to Sobhy, natural gas will be the key to the recovery of the oil and gas sector in the coming years.
“It is hard to rapidly increase petroleum production due to limited resources. Natural gas, however, has potential to grow exponentially depending on how much is invested in the field, he explained.
Fahmi announced last week that Lebanon is set to receive natural gas from Egypt through the Arab pipeline beginning mid-month.
“Egyptian gas will be exported to Lebanon via Syria in a trial run on Sept. 8 and we will begin pumping commercial quantities on Sept. 15, MENA quoted Fahmi as saying.
The Lebanese Energy Minister Alan Taparian said in May that Lebanon would receive 30 million cubic feet of natural gas via the Arab pipeline.
The ministry has also stepped up plans to export more natural gas to Israel, despite ongoing legal battles by Egyptian activists calling for the end of the export deal.
The Egyptian Petroleum Association, a subsidiary of the Ministry of Petroleum, has developed a new plan to increase Egypt’s natural gas exports to Israel by 2.5 million tons, Al-Masry Al-Youm reported Wednesday.
This increase would represent a 135 percent rise from export levels during the 2008-2009 fiscal year.