Centre Energie - Centre for Energy East Mediterranean gas: key - - PowerPoint PPT Presentation

Marc-Antoine Eyl-Mazzega, Director European Parliament, Strasburg, 11 Septembre 2018

Centre Energie - Centre for Energy

East Mediterranean gas: key factor of stability?

Egypt’s population is booming, so is electricity demand, fueling energy insecurity in past years

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Evolution of Egypt’s population, 1990-2050e

20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000 180 000 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050 Total population (Thousands)

Source: UN. World Population Prospects 2017

50 100 150 200 250 300 350 50 100 150 200 250

$billion TWh

Total electricity consumption GDP Bn $

Total Electricity Consumption (TWh) & GDP ($Bn)

Source: IEA, World Bank

Booming urban population: challenge of sustainable cities

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Population in 2015, 2025 and 2035e (in million)

Source: UN World Urbanization Prospects 2018

Egypt’s CO2 emissions rising…

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Carbon Dioxide Emissions, 2007-2017 (Mt)

50 100 150 200 250 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Carbon dioxide emissions (Mt)

BP Statistical Review June 2018

Energy mix dominated by oil and gas, based on domestic resources and some imports

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Egypt’s energy mix (Mtoe), 2017

Oil 43% Gas 53% Hydro 3% Renewables 1%

BP Statistical Review june 2018

Egypt suffered from the decline in domestic oil and gas production

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Egypt’s gas production and consumption trends, 2007-2017 (Bcm)

10 20 30 40 50 60 70 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Gas production Gas consumption

Source: BP Statistical Review June 2018

1 2 3 4 5 6 7 8 9 10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Egypt Average low&middle income economies

Comparison of Egypt’s and emerging economies GDP growth (%), 2007-2017

Source: World Bank

Gas-dominated electricity mix key challenge as Egypt became net importer of gas

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Egypt’s Electricity Mix (TWh), 2017

Oil 14% Gas 78% Hydro 7% Renewables 1%

BP Statistical Review june 2018

Power Sector 62% Energy industry

• wn use

10% Industry 12% Transport 1% Residential 4% Chemical/Petro chemical 11%

Split of natural gas consumption by sector, 2016 Egypt’s power sector consumed 33 bcm in 2017, similar to Italy’s power sector

Egypt undergoing painful but necessary economic reforms, including progressive removal of energy subsidies

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Egypt’s budget sector* expenditure (in % of GDP)

Source: IMF Country Report No. 18/213

5 10 15 20 25 30 35 2015/2016 2016-2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 Total Expenditure Energy Subsidies Fuel Subsidies

*Budget sector comprises central government, local governments, and public corporations Fuel subsidies: gasoline, diesel, kerosene, LPG and fuel oil;

Gas output could nearly double following key ENI and BP projects, LNG imports will stop, providing economic relief

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Egypt’s gas supplies (excluding pipeline imports), 2014-2021e (bcm)

Source: Ifri, BP, ENI, Gafney Cline& Associates

10 20 30 40 50 60 70 80 90 2014 2015 2016 2017 2018 2019 2020 2021 Atoll, Nooros and near term developments LNG FSRU Zohr WND - North Alexandria WND - Phase 2 Salamat

ENI’s possible Noor discovery, if confirmed, would be another game changer for Egypt and the region

Egypt working to add coal, nuclear & renewables capacities, gas demand for power & industry continues to grow

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11 9 16 4 24 10 26 CSP PV Wind Hydro Gas&Oil Nuclear Coal

Electricity Mix « Updated Optimal Scenario » 2029/2030 (%)

Source: Ministry of Electricity and Renewable Energy

Inefficient thermal plants could be phased out and the 14,4 GW Siemens turbines are super efficient, however gas demand will still grow as gas fired plants will offer a back up to meet peak demand, will offset oil plants and will provide a reserve to compensate for potential delays in the development of other projects. This will constain the gas export potential.

10 20 30 40 50 60 70 80 90 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gas consumption Gas production

Gas demand/supply balance, 2007-2022E (bcm)

Source: BP2018, Ifri estimates

Israel another gas winner: electricity mix cleaner&more secure, surpluses exported to Jordan and Egypt

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Israel’s electricity mix in 2010 and 2016

Source: Ifri

Israel will phase out coal by 2030 and gas will meet growing domestic demand for power and in the transport sector. A second export wave > 2025 is possible… if Leviathan phase 2 is developed

Egypt will become a gas hub in the Eastern Mediterranean as infrastructure is already in place

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East Mediterranean gas infrastructure and projects

Source: Ifri

Offshore gas projects are not cheap, Egypt is a growing&attractive market, sunk cost infrastructure or small new investments likely to be privilegged for selling gas. LNG exports from Egypt based on Israeli or Egyptian gas to Europe likely though in the short term.

Cyprus’ gas potential promising, exploration ongoing (Calypso…), synergies with Israeli/Egyptian infrastructure…

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Source: Ihutterstock

Centre Énergie – Centre for Energy

eylmazzega@ifri.org

27, rue de la Procession, 75740 PARIS CEDEX 15 Tél. +33 (0) 1 40 61 60 00 • Fax : +33 (0) 1 40 61 60 60 www.ifri.org 14