Revisiting Egypt's Energy Policy

Abstract

Egypt's oil and gas sector is one of the most strategic sectors in the economy being the single largest industrial activity in the economy, with exports of crude oil and petroleum products constituting 40% of Egypt's export revenues and 20% of its GDP. However, Egypt is currently trapped between dwindling oil production and increasing domestic consumption, a fact which threatens the country to become a net importer of crude oil as well as deprive it of strongly needed foreign exchange. Yet, Egypt has proven natural gas reserves and its future energy outlook seems to be more affiliated with natural gas especially for future export potential. Given these conditions, a restructuring of the sector is necessary for sustainable development. Suggested strategies in line with Egypt's development efforts are outlined including gradual reduction of energy subsidies and their expected impacts on the economy.