Fourteen New Petrochem Projects in Egypt's $20 Billion Oil and Gas Expansion

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In mid-January 2005, the new chairman of the Egyptian Petrochemical Holding Company (Echem), Sanaa El-Banna, announced a macro-scale three-phase plan for the development of the country's petrochemical industry. The chairman said that the plan, covering a time span of 20 years, aims to make use of Egypt's extensive natural gas reserves, which would serve as the cornerstone of the emerging industry. Egypt's petrochemical industry currently generates $7 billion annually.

The plan will see $10 billion invested into fourteen new petrochemical complexes, creating 100,000 new jobs over the period. The sites would be in the governates of El-Behira (3.1 million square meters), Kafr Al-Sheikh (4.2 million square meters), El-Dakahlia (7.65 million square meters), Damietta (2.4 million square meters) Ismailia (0.67 million square meters), and Suez (6.3 million square meters). These sites have been chosen because of their proximity to export facilities.

In 2003, a number of new projects were initiated. A contract has been signed by Echem and Damietta Port Authority for the production of basic and intermediate petrochemical products at the Murbarak Complex for Natural Gas and Petrochemicals in Damietta. Current planning includes a $500 million methanol plant, with 1.3 million tons annual production capacity, and a $700 million urea/ammonia plant, with a daily capacity of 3,500 tons. These projects will be undertaken by joint ventures between Egypt and two Canadian companies. The same concession site also has the recently completed SEGAS plant for LNG. This $1.3 billion is a Spanish-Egyptian venture.

Egypt plans total investments of $20 billion in the oil and petrochemical sector over the next five years, which will include $16 billion of foreign investment. There are eight Canadian companies working in the field of oil exploration and 20 in the fields of petrochemicals and industrial equipment.

Under a $450 million contract with Oriental Petroleum Company (OPC), Emchem is planning increased propylene and polypropylene production. The Port Said plant will produce 350,000 tons of polypropylene annually. OPC is the country's sole producer of polypropylene and currently exports 10% of its production to Europe, the Middle East, and Africa.

Figures released by the ministry of petroleum show Egypt's natural gas reserves at 60 trillion cubic feet and petroleum and natural gas now represent 8% and 40%, respectively, of the country's exports. The export contribution of the sector is expected to rise steeply. The minister of petroleum told Al Achram that gas exports alone have the potential to generate $2 billion a year, and he said that Egypt's strategic reserves are currently being made available for new gas export and manufacturing schemes.

Nehad El-Kordi, General Manager of SEGAS, said that the country's location gave it a comparative advantage when it comes to exporting to Asia and Europe. He added that a lot has to be done to improve a business climate that currently hinders rather than encourages foreign investment. He said that the pricing of gas must be competitive with other producers in the area and this, with the general business environment are two major factors that will determine who becomes the region's key players.

If Egypt is to compete successfully with Algeria, Saudi Arabia, Qatar, and Iran and attract the massive investment needed to implement the Echem plan, the total time required to enforce a contract and the protection of foreign investors rights are all factors that must be considered by policy makers, El-Kordi said.

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