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Egypt's Energy Sector: Regional Cooperation Outlook and Prospects of Furthering Engagement with the Energy Charter

bMr. Karim Hegazy - 26 May 2015

Egypt and the Energy Charter

Egypt's energy sector is currently facing a variety of conflicting and overlapping challenges. This is mainly seen in Egypt's gruelling efforts to strike a balance between production, domestic consumption, and export revenue, while seeking to maintain internal political harmony. Despite the fact that Egypt is the largest non-OPEC oil producer in Africa and the second largest gas producer in the continent, as well as the vital role it plays in regional and global energy markets, the country's energy status throughout the last four years reflects a reversal on all levels. This crisis is as much the consequence of historical 'mal-planning' as it is the short-term consequence of the country's past three years of political turmoil following 2011 revolution. However, starting from late 2014 investment and economic growth started picking up on the back of political stability. Fixed investment was set to be the primary driver of growth as a result of greater clarity and transparency in Egypt's economic policy. Furthermore, the current government firmly displayed some decisive measures to further patch-up the energy sector. This is most likely disclosed under the pillars of the new energy strategy, including: (1) Security, by boosting and diversifying and improving energy efficiency; (2) Sustainability, by addressing debt build-up and phasing out of subsidies in a socially responsible manner and (3) Governance, by improving and modernising the oil and gas sector’s governance and encouraging private sector investment.

In light of the above, and in the framework of the Energy Charter's modernisation process and the efforts to attract newcomer countries - mainly key countries in MENA region - to the organisation, Egypt was a high priority in the Energy Charter’s enlargement agenda. This interest was mainly unveiled within the modernisation process during the negotiations of the 'International Energy Charter' political declaration. Egypt, then, proceeding from the country's explicit interest to take part in the Charter's modernisation process, engaged actively in the four rounds of negotiations on the International Energy Charter, but still holds some remarks with regard to the text. This said, both parties are most likely keen to pursue a strategic approach in maintaining their presumably win-win relationship.


The contents of this work are the author's sole responsibility. They do not necessarily represent the views of the Energy Charter Secretariat or any members of the Energy Charter Treaty.