EGYPT - EGPC Profile.

There are about 75,000 people working in the state's hydrocarbon sector, including EGPC, Ganope, Egas and Echem, under the control of the Petroleum Ministry. EGPC is one of the biggest NOCs in the Middle East and Africa.

Although it has lost the oil sector in Upper Egypt, the gas sector to Egas and the petrochemical sector to Echem, EGPC remains a huge concern. It is integrated with major upstream and downstream oil operations. It functions as a holding group and has almost 30 operating subsidiaries and affiliates.

EGPC was established in 1962 as an evolution from the General Petroleum Authority which was created in 1956. It grew rapidly as it became in charge of 50-50 E&P ventures with Amoco (now part of BP), Agip and many other foreign companies. The government in 1964 nationalised the sole oil concessionaire, Anglo-Egyptian Oilfields (Shell-BP). The assets of this company were taken over by General Petroleum Co. (GPC), also created in 1956 and now one of EGPC's operating subsidiaries.

EGPC controls all or part of the capital of all Egyptian state-run companies in the oil E&P sector. It holds 50% in all the oil producing JVs which are operated by foreign IOCs and some Egyptian companies. These JVs are all headed by EGPC executives appointed by the Petroleum Minister.

Hassan Aql: The Chairman of Ganoub el-Wadi Holding Petroleum Co. (Ganope) since it was established in 2003, Aql is an engineer who until then was a prominent deputy chairman of EGPC. Ganope's area of operations is Upper Egypt, which already produces oil and has interesting prospects.

One of these prospects are oil shale deposits in Upper Egypt's region of Abu Tartour, where they have been estimated at 1,200m BOE. A Canadian consortium led by Centurion Energy is studying these and oil share deposits in the Red Sea, where they have been put at about 4,500m BOE, for the Egyptian Mineral Resources Autority (EMRA). Centurion, a Calgary-based firm now owned by Dana Gas, has had long experience in the tar sands of Alberta. Once the Abu Tartour shales are to be developed, they will be part of Ganope's E&P operations, with EMRA (see omt4EgyptWhoJan21-08) to transfer that area to the company. Now operating in Upper Egypt under the name of Dana Gas (see gmt2EgyptFieldsJan7-08), Centurion will stand a good chance of gaining the most profitable blocks in Abu Tartour.

Hassan Younis: For years the Minister of Electricity and Energy, Younis has become a key decision maker in Egypt as the government has decided to shift to nuclear energy in a big way with the help of Western powers, notably including France and the US. As such, Younis now overseas Egypt's Nuclear Power Plants Authority (NPPA) which has recently begun studies at a possible site for the country's first atomic energy station. Younis is leading the advocates of renewables in the Middle East and North Africa (MENA).

During a tour of projects in Aswan earlier this month, Younis said the NPPA was carrying out studies to upgrade and modernise seismographs used to measure tremours and earthquake activity at the site at el-Dab'a, west of Alexandria. At the same time, the Nuclear Materials Authority (NMA) is assessing uranium reserves at nine sites across the country to determine the economic feasibility of extracting the nuclear fuel. The study is being carried out in co-operation with the UN's International Atomic Energy Agency (IAEA). Younis said his ministry had prepared a draft nuclear bill outlining future relations and co-operation between Egypt and the IAEA, adding: "The bill, which will be presented to the government for approval in March, sets a legal framework for co-operation with the IAEA until 2030". El-Dab'a was chosen as the site for Egypt's first nuclear plant in 1983.

Institutions under Yunis' ministry include the New & Renewable Energy Authority (NREA), which oversees the NPPA. Together with counterparts from other MENA countries, the NREA has lined up with environmentalists in making strong arguments for the use of renewable energy technologies in power generation.

It is not just concern for the environment which is behind the growing number of renewable energy projects in the MENA. Despite the high costs associated with clean energy, MENA decision-makers and industry experts are confident that alternative power generation projects will become both desirable and economically viable, with Egypt's rich Western allies to provide considerable aid in this field.

MENA governments are making concerted efforts to push the alternative energy agenda. Several dedicated state organisations like the NREA have been created to oversee and implement plans to reduce reliance on fossil fuels. New Energy Algeria (Neal) and the newly established Executive Agency for Renewable Energies in Libya have all been formed to increase the proportion of power generated from non-conventional resources. Egypt, Morocco, Tunisia and Jordan have implemented, or are planning to implement, wind farm projects. Solar-hybrid power plants are being developed in Algeria, Egypt and Morocco.

The six Arab Gulf Co-operation Council (GCC) states are looking at renewable energy. Qatar's master-plan for its power and water sectors, being prepared by a Dutch consortium of Kema and Royal Haskoning, is looking into the use of alternative energies. Saudi Arabia has set up the Centre of Research Excellence in Renewable Energy to study the use of hydrogen, methanol and fuel cells, as well as solar and wind energy. The UAE is leading the way on reducing the amount of carbon used in construction with projects such as Abu Dhabi's Masdar Institute of Science & Technology and Dubai's Lighthouse Tower. With a lot of sunshine and wind, the GCC will have successful renewable energy projects.

Younis has got the government to set a target to produce 20% of its electricity from renewable energy sources by 2020, while Algeria is to produce 10% in the same period. Neal CEO Tewfik Hasni in August 2007 was quoted as saying: "Algeria has the biggest solar thermal potential in the world - more than four times world energy consumption".

Using nuclear, solar, wind or hydro energy for power generation allows oil and gas-producing states to divert greater volumes of fossil fuels to exports. Increasingly, energy security is also becoming a key consideration. Bothaina Rashed, head of planning and follow-up at NREA says: "It is about securing energy supply in the face of high oil prices and international fluctuations in energy markets. There is added value if you export oil and natural gas or use it in the petrochemicals industry. This is better than burning it for electricity".

Costs are projected to fall with improvements in technology and the creation of economies of scale. For now, governments will need to provide incentives for potential investors in renewable energy projects. Egypt is to attract private firms into alternative energy. NREA, with the Electricity and Petroleum Ministries, has prepared a law to encourage investors. It is due to be ratified by parliament in early 2008. Algeria has adopted a feed-in law under which utilities are obliged to buy electricity from renewable sources. Such laws set a tariff which utilities must pay for renewable power bought from private generators. Ms Rashed says: "We have to submit some incentives to cover the difference between renewable production costs and the costs of conventional electricity. It is important, however, that financial incentives, if they are adopted, are only temporary...to encourage developers and contractors to invest their money sooner rather than later".

A significant barrier to investment in renewables across the MENA is the subsidised price of electricity, which keeps returns on investment minimal. Ms Rashed says: "The [Cairo] government has adopted policies concerning the gradual increase of electricity prices, but it will take time before they reach the actual cost of production. If you compare costs without a tariff with actual production costs, wind electricity could be competitive". While comparisons between renewable and conventional production costs are available for members of the OECD, figures for MENA countries have yet to be compiled. They will differ significantly from OECD costs due to lower conventional feedstock costs and differing levels of renewables availability. In theory targets states like Egypt and Algeria have set themselves for renewables are achievable. Success will depend on the determination and political will of the authorities.

A report published in August 2007 by Ernst & Young says worldwide demand for renewables is rising at an unprecedented rate. In 2006, the market was worth $100,000m, and this is predicted to reach $750,000m by 2016. In the long run, external pressure may play an important role in ensuring that renewable energy policies are implemented. For North African countries such as Algeria, which plans to export 6,000 MW from renewables to Europe by 2020, the EU's position on alternative energy will be key. In March 2007, the European Council adopted an action plan committing the EU to achieve at least a 20% cut in greenhouse gas emissions from 1990 levels by 2020. The council has set a binding target of a 20% share of renewables in EU's energy consumption by 2020.