Egypt’s energy sector has traditionally been defined by the country’s status as the largest oil producer outside of the Organisation of the Petroleum Exporting Countries (OPEC) and the third-largest producer of dry natural gas on the Africa continent. Its control over the Suez Canal, meanwhile, places it at the centre of the global energy network, safeguarding shipments between the Gulf, Europe and North America.

In recent years the government has implemented an energy strategy aimed at eliminating power shortages and harnessing the private sector to broaden the range of energy inputs. The fruits of this effort are a transformation of a power deficit into a power surplus, the revitalisation of Egypt’s liquefied natural gas (LNG) sector, and the emergence of solar and wind industries that are establishing Egypt as a leader for renewables. While the global spread of Covid-19 began to affect the Egyptian economy in the first half of 2020, the fact that much of its hydrocarbons production is consumed locally has helped shield it from more severe headwinds.

Sector Organisation

Egypt’s energy sector is overseen by a number of government bodies. Overall responsibility for strategy lies with the Supreme Energy Council (SEC), established in 1979 and reformed in 2014. The SEC has complete control over energy pricing policies, regulations and sector development. The nation’s petroleum resources are managed by the Ministry of Petroleum and Mineral Resources (MPMR), which oversees exploration; the production and distribution of oil, oil products and gas; and all related services. The ministry carries out its duties through three affiliated entities: the Egyptian General Petroleum Corporation (EGPC), the Egyptian Natural Gas Holding Company, and Ganoub El Wadi Petroleum Holding Company (GANOPE).

The Ministry of Electricity and Renewable Energy (MERE) oversees the sector and interacts with the industry through a subsidiary, the Egyptian Electricity Holding Company, and in coordination with other bodies, including the New and Renewable Energy Authority (NREA), the Egyptian Electric Utility and Consumer Protection Regulatory Agency, the Hydro Power Plants Executive Authority, the Nuclear Power Plant Authority (NPPA) and the Atomic Power Plants Authority.


Maturing fields and a dearth of new discoveries have resulted in a decline in Egypt’s oil reserves from a peak of approximately 4.5bn barrels in 2010 to 3.3bn barrels at the close of 2018, according to BP’s “Statistical Review of World Energy 2019” report. With less than 10% of the country’s 200 wells producing oil naturally, according to the Society of Petroleum Engineers, artificial lift processes have become widely used in the industry, including beam pumping, electrical submersible pumping and gas lift, and there is growing focus in the industry on utilising new technologies to exploit the most from ageing wells. “While new discoveries rightly attract attention, optimisation of recovery from mature fields is an important focus,” Craig Robertson, country manager of oil exploration and production firm TransGlobe, told OBG. “With a 30% annual decline from mature wells, the implementation of new technologies and extraction methods has the potential to significantly impact the medium- to longterm growth of Egypt’s oil and gas sector.”

Oil production levels have declined over the past decade, from 730,000 barrels per day (bpd) in 2009 to 670,000 bpd in 2018. The principal producing fields are concentrated in the Western Desert and Gulf of Suez. Other areas with significant production levels include the Eastern Desert, the Sinai Peninsula, the Nile Delta and Upper Egypt. Current levels of oil production in Egypt are not sufficient to cover domestic consumption, which averaged 760,000 bpd in 2018, and therefore the country has been an oil importer since 2006.

However, oil exploration activity has increased in the years following the country’s return to political stability in 2013. Egypt signed around 83 oil and gas exploration deals with international oil companies (IOCs) between November 2013 and December 2017, and recent discoveries in the Siwa Oasis and the Western Desert’s Faghur Basin have suggested that the nation’s reserves may be replenished by significant oil finds. IOCs have shown considerable interest in exploration blocks since 2019. In September 2019 GANOPE, representing the MPMR, completed a bidding round for 10 Red Sea blocks. The invitation for tenders drew interest from many IOCs, including Shell, ExxonMobil, Equinor, Dragon Oil, Rosneft and Total. In December 2019, prior to the outbreak of Covid-19, ExxonMobil announced it had acquired 680,000 ha offshore that it initially intended to explore during 2020. Further exploration concessions followed in the same month, with Chevron and Shell each awarded a block and a further block awarded jointly to Shell and Mubadala Petroleum.


Egypt’s refining segment is the largest in the African continent and consists of approximately nine facilities. All refineries in the country are wholly or majority-owned by EGPC through its refining subsidiaries. The largest refining facility is the El Nasr refinery, which is operated by Nasr Petroleum Company and has a nameplate capacity of 143,000 bpd. Estimates of Egypt’s total refining capacity vary: BP’s statistical review placed it at 795,000 bpd in 2018, while others have given higher figures. Production levels, however, fall considerably below this nominal capacity: according to OPEC, in 2018 Egypt’s refineries produced an average of 511,000 bpd of petroleum products.

Most of this output is destined for the local market, and in order to meet anticipated rises in demand, successive governments have pursued a long-running refinery expansion strategy. Egypt’s second-largest refinery, the Mostorod facility, located 20 km north of Cairo, has been at the centre of this policy. The Mostorod II project, for which construction began in 2014, is being undertaken as a public-private partnership, with backing coming from EGPC and a consortium including Qalaa Holdings and a number of banks and Gulf investors. When completed, the new facility will receive the currently unused atmospheric residue from the existing facility and transform it into a number of sought-after products, such as diesel and kerosene. However, funding challenges resulted in a missed completion deadline in 2017, and it remains to be seen if the facility will become fully operational before the end of 2020. Similarly, a planned 60,000-bpd expansion of the MIDOR refinery was planned to come on-line in 2018, but completion is now expected in 2022. In late 2018 the MPMR signed a $7.1bn agreement with China to develop a refinery at the Suez Canal Economic Zone – a project that has been on the drawing board in various forms for more than a decade – slated for completion in 2023. An additional 12,700 bpd is also expected to be added to Egypt’s total capacity with the completion of an expansion project at the 50,000-bpd facility at Assiut. It was initially expected to open in 2020 but may face Covid-19-related delays.


The downstream market in Egypt is run on an open-market basis, without distribution quotas, and is therefore highly competitive. More than 15 global lubricant players are present in the sector, including ExxonMobil, Shell, Total and Chevron. The size of the nation’s refinery segment means that it also acts as an exporting centre for East Africa. The downstream arena is price-oriented in the low-grade segment, but in the high-grade segment quality plays a bigger role in sales. While a challenging economic backdrop might generally be expected to increase the weight of pricing in buying patterns, some market participants see an opposite trend. “Economic pressure is impacting demand for lubricants by pushing customers to consider not only the price point of products, but also their quality and effectiveness,” Gehad Nasr, director and country manager of Chevron Egypt Lubricants, told OBG. “There continues to be growing demand for newer, premium products that can increase the oil drain intervals of a vehicle, thus reducing the overall cost to the consumer in the long term.”


While Egypt has yet to turn around a declining trend in oil production, its efforts to boost national output of natural gas have met with more immediate success. Production of dry natural gas declined by 31% between 2012 and 2016, according to the US Energy Information Administration – a trend that transformed the country from a gas exporter to an importer of the product. However, a series of gas discoveries have returned the nation to gas self-sufficiency. The El Zohr gas field, discovered in 2015, is one of the largest offshore natural gas fields in the Mediterranean, with estimated reserves of 30trn standard cu feet (scf). Production at the site began in 2017, and by November 2019 had reached 2.7bn scf per day (scfd). This level of flow was the original peak production estimate for the field, but as drilling continues the figure has been revised upwards to 3.2bn scfd. El Zohr is being developed by a consortium consisting of Eni, Rosneft, BP and Mubadala Petroleum, along with a number of Egyptian oil and gas companies. In February 2020 Eni announced that commercial operations on the El Zohr field’s 15th well would start imminently. Other significant gas reserves that are boosting Egypt’s production levels include the Atoll field, where production began in February 2018, and the West Nile Delta (WND) project, which started producing natural gas in March 2017. Egypt’s gas production expanded by 20% in 2019, as new phases of the WND project came on-stream.


Egypt’s success in reinvigorating its upstream gas industry has enabled it to cease imports of LNG and re-establish itself as an LNG exporter. Egypt has two LNG plants, located at Idku and Damietta, which were starved of feedstock when the government was compelled to direct dwindling supplies to domestic use. Tamer Abdelsalam, the senior optimisation manager at the Ikdu plant, told industry media in late 2019 that between 2013 and 2019 the volume of gas feed reaching the plant attained only 13-15% of design capacity. However, by September 2019 the company was reportedly operating at 90% capacity, with plans to reach 100% nameplate capacity by the close of the following month. Despite improvements, industry media reported in late May 2020 that LNG exports from the Idku plant has been halted since March 11, 2020 due to the Covid-19-induced drop in prices. The plant at Damietta, to which gas was cut in 2012, has yet to be re-opened due to an ongoing dispute between the government and its operator, Union Fenosa Gas. Nevertheless, LNG exports from Egypt more than doubled in 2019 to reach 4.8bn standard cu metres per day (scmd) of natural gas equivalent, according to S&P Global Platts Analytics.

As well as locally produced gas, Egypt’s long-term plan to re-establish itself as a major LNG exporter will see it receive natural gas from fields being developed by other Mediterranean states. According to a 2018 deal signed by Delek Drilling and Houston-based Noble Energy, Egypt will receive 64bn scmd of natural gas from Israel’s Leviathan and Tamar fields via the subsea East Mediterranean Gas pipeline. Israel started exporting natural gas to Egypt from the Leviathan field in January 2020. The flow of gas, authorised for 15 years by the MERE is expected to serve the domestic market as well as export markets via Egypt’s LNG terminals.

Trade Infrastructure

Egypt has well-developed infrastructure for producing and shipping hydrocarbons products to foreign markets. The Damietta LNG plant has a single LNG train and a capacity of 240bn scf per year. The LNG plant at Idku, meanwhile, has two LNG trains, each with a capacity of 172.8bn scf per year. Both facilities are connected to the Arab Gas Pipeline, which departs the country at El Arish on the Mediterranean coast of the Sinai Peninsula and connects with Aqaba on Jordan’s Red Sea coast, as well as the Syrian cities of Damascus and Baniyas. Egypt began dry exports of natural gas in 2003, with export flows reaching a peak of 647bn scf per year in 2009. Persistent sabotage in 2011 and 2012 resulted in supply disruptions to Jordan and Israel, and in 2012 Egypt halted natural gas exports to Israel completely due to a payment dispute. The pipeline fell into disuse in 2014, but in 2018 the consortium operating the Tamar and Leviathan fields announced that it would purchase a stake in the pipeline’s operating company and ship gas from Israel to Egypt through the connection.

Egypt’s geographic position also makes it an important transit point for global crude oil and natural gas shipments. The 193-km Suez Canal connects the Mediterranean with the Red Sea, allowing for northbound shipments from the Gulf to European and American markets, and southbound vessels from Russia, Turkey, the Netherlands, Algeria and Libya destined for Asian markets. Vessels that exceed the draught limitations of the Suez Canal are able to offload their cargo at the Red Sea port of Ain Sokhna, from where it is transferred to the Sidi Kerir terminal on the Mediterranean coast through the 320-km Suez-Mediterranean pipeline, a joint venture between the Egyptian government and a number of oil-exporting countries in the Gulf.


The increase in Egypt’s gas production has mitigated the challenge of rising energy consumption levels. In the decade between 2008 and 2018 Egypt’s total primary energy consumption grew from 71.7m tonnes of oil equivalent (toe) to 94.5m toe, according to BP’s “Statistical Review of World Energy 2019”. This 31.8% increase was driven by an expanding population, a growing industrial sector, an increase in the number of energy-intensive oil and natural gas extraction projects, and an upward trend in private and commercial vehicle sales. Oil and natural gas were the two largest components in Egypt’s energy mix in 2018, accounting for 42.3% and 51.9% of the nation’s energy consumption, respectively. That year hydroelectricity provided 3.2% of the energy consumed, other renewables contributed 0.65% and coal 1.7%.

Since 2014 the government has made efforts to move the energy market from a state subsidy system to one based on market prices. In the first year of subsidy reform diesel prices rose by between 64% and 78%; natural gas, which most of the nation’s taxi fleet relies on, increased by 175%; and 92-octane petrol was made 40% more expensive. The introduction of a value-added tax in 2017 has also made fuels more costly for both industrial and retail consumers.


Much of Egypt’s hydrocarbons consumption is accounted for by the nation’s electricity generation, transmission and distribution network. More than 60 thermal power stations are located across the country and are operated by five state-owned generation companies. Approximately three additional thermal plants are operated on a private sector basis, developed since 2001 under a build-own-operate-transfer system. Since 2017 three gas-fuelled Siemens-operated plants have also supplied power to nation’s the grid. The renewables segment includes a hydropower component, three wind farms, one solar farm and a partly solar-driven gas facility (see analysis).

Egypt’s electricity sector has been radically overhauled over the past decade. In the years following the revolution of 2011, underinvestment in generation capacity coupled with a shortage of gas frequently resulted in peak demand exceeding the system’s capacity, resulting in regular load shedding. A government reform effort and the return of private sector investment to the sector have helped to overcome this challenge. An installed capacity of 55,213 MW, according to the MERE’s most recent report from FY 2017/18, now comfortably exceeds the country’s peak demand of around 30,800 MW.

The reform of the power sector also included the nation’s transmission network. The Egyptian Electricity Transmission Company (EETC) oversaw a national grid with a 130,868-MVA capacity at the end of FY 2017/18, which was around 8.9% larger than the previous year. While the state dominates the segment through its ownership of nine transmission companies, a new electricity law passed in 2015 allows for private sector investment at the generation level, as well as in transmission and distribution segments.

Work to further improve the country’s transmission network continues. In 2019 Egypt signed a $201m agreement with the European Bank for Reconstruction and Development to enhance the EETC’s electric grid. The EETC is also pursuing opportunities to increase international connectivity. Egypt currently has electricity connections with Libya and Jordan, and has ambitions to establish itself as a power conduit serving MENA, African and European companies. An Egypt-Saudi Arabia interconnection project aims to exchange 3000 MW between the two countries through submarine cable across the Gulf of Aqaba. In early 2020 Egypt and Sudan launched $31.7m project to connect their respective national grids. The connection will span 1000 km and will be constructed by the EETC and India’s Larsen & Toubro. When the project is completed, the link will have a total capacity of 240 MW. Future interconnection plans include links to the north of the country, starting with Greece and Cyprus.


Conventional thermal generation through steam, gas and combined-cycle technology accounted for nearly 93% of generation capacity in FY 2017/18. Hydropower constituted approximately 5.1% of the total. Renewable inputs, according to the MERE, accounted for 2.1%. Renewable energy, however, is one of the fastest-moving segments in the local industry, thanks to a government strategy to boost the contribution of sustainable energy sources to generation capacity to 20% by 2022 and 42% by 2035. In the solar arena, the development of the 1.8-GW capacity Benban project has acted as a catalyst for the segment, lowering costs for solar power and attracting significant international investment (see analysis).

Within the wind segment, the biggest advancement has been made in the Red Sea area, where in July 2018 Egypt inaugurated the region’s largest wind farm at Gabal El Zayt. The facility, an extension of the pre-existing wind farm, is divided into three components with capacities of 240 MW, 220 MW and 120 MW. Gabal El Zayt is home to 390 wind turbines, and is owned and operated by the NREA. Development of the project took place under an engineering, procurement and construction contract, which provided the basis of a collaborative effort with a number of international institutions, including the Japan International Cooperation Agency, Spain’s FIEM and Germany’s KFW.

Ras Ghareb, Egypt’s largest standalone wind farm, meanwhile, became operational in late 2019. It is Egypt’s first private wind energy facility, having been developed on a build-own-operate scheme. The farm is owned by ENGIE (40%) and its consortium partners Toyota Tsusho Corporation/Eurus Energy Holdings Corporation (40%) and Orascom Construction (20%). In December 2019 the EETC inked a power-purchase agreement with the UAE’s Amea Power for the supply of 500 MW of wind and 200 MW of solar. The wind farm will be constructed in Gabal El Zayt, located on the Gulf of Suez, while the solar plant will be constructed in Kom Ombo, in Upper Egypt. Saudi energy and water company ACWA Power will contribute another 200 MW of photovoltaic capacity to the Kom Ombo site.

Egypt’s drive for renewables has been pushing out older technologies. In April 2020 the government postponed plans for a $1.5bn, 6000-MW coal-fired power plant at the port of Hamrawein and announced that it would instead pursue a renewables project. “Egypt has the potential to meet its energy diversification goals, particularly when hydro, solar and wind are taken into account,” Faisal Eissa, general manager of renewable energy firm Lekela Egypt, told OBG. “Wind power is receiving increased interest as advances in related technologies have led to the development of turbines with less environmental and visual impact, along with improved energy production.”


Egypt’s strategy of increasing its range of energy inputs is creating investment opportunities in other areas of power generation. In December 2017 the country signed a $30bn deal with Russia to build North Africa’s first nuclear power plant, to be located at El Dabaa. The plant will comprise four pressurised water reactors with a combined nameplate capacity of 4800 MW. Russia’s Rosatom plans to commence operations at the first unit of the El Dabaa power plant in 2026, with the three remaining reactors coming on-line one or two years afterwards. Additionally, Australian energy services firm Worley announced in December 2019 that it will provide consultancy towards the development of the plant until 2030, extending an arrangement with the NPPA that started in 2009.


The success of Egypt’s solar and wind projects alongside the government’s determination to diversify its energy sources means that renewable energy is likely to remain a particularly active segment over the medium term: Fitch Solutions predicts that renewables will be the fastest-growing energy segment in Egypt in the period to 2028. Its growth as a gas exporter is also likely to continue in 2020: according to the Central Agency for Public Mobilisation and Statistics, the value of LNG exports climbed by 150% in 2019, with shipments made to the EU, Pakistan and Singapore. A flurry of recent exploration contracts, meanwhile, has raised hopes that oil production levels will be able to emulate the gains anticipated for the gas arena.