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The Egyptian Petroleum Industry

World oil production and reserves have witnessed a steady increase in recent years while consumption and prices have fluctuated up and down. Natural-gas consumption has been following an upward trend, matched by an increase in production and is expected to continue growing in the future. Likewise, world demand for petrochemicals is strengthening.

The Arab region produces approximately one-third of the world’s oil and includes approximately two-thirds of reserves. The region’s share of world natural-gas production is just over 9 percent while its reserves represent over one-third of the world’s total. Saudi Arabia tops the list of oil-producing countries, while Algeria tops those producing natural gas.

Egypt, the first Middle Eastern country where oil was discovered, continues to be a significant producer. As of June 1999, average oil production reached 785,000 barrels per day (bpd), coming mainly from the Gulf of Suez, the Western Desert, the Eastern Desert and Sinai. The country is also one of Africa’s major centers for refining.

Natural-gas exploration in Egypt has gained greater attention lately, with production capacity increasing to 1.6 bcf/d and reserves reaching 43 billion cf. following major discoveries. Gas exports have yet to materialize, though the potential in this area is great.

The petroleum sector is a major factor in the growth of the Egyptian economy, accounting for 8 percent of GDP and covering 93 percent of the country's primary energy requirements, not to mention being an important hard-currency earner, contributing to approximately 40 percent of total export revenues. The sector includes the Egyptian Petroleum Corporation and its affiliated companies, all under the umbrella of the Ministry of Petroleum, along with various Egyptian and foreign private companies. The oil sector attracts major foreign direct investment into the country, and private sector involvement has been increasing since the re-entry of private capital in the early 1960s. Natural-gas production is also undertaken by private joint ventures.

Recommendations for the sector’s continued development include intensifying exploration activities, applying modern technologies, enhancing financial incentives, developing human resources and expanding private sector participation.

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