Boston, MA -- (SBWIRE) -- 03/07/2013 -- BMI View: Months of political turbulence - which has not abated since the election of the Muslim Brotherhood's Mohammed Morsi as president - has undermined policy as it relates to the country's most significant economic sector. With Morsi acting as president, domestic needs are taking priority over exports, as the decision to end gas supplies to Israel confirms and disruption to Jordan and Spain gas supply occurred. This will inevitably impact the pricing climate for international oil companies operating in Egypt's gas sector, potentially making it more of a struggle to secure internationally competitive rates when selling gas.

We highlight these trends and developments in Egypt's oil and gas sector:

- BMI expects Egyptian oil production to decline from 727,100 barrels per day (b/d) in 2012 to 648,300b/d in 2021. At the same time, consumption is expected to rise significantly, from 709,200b/d to 945,700 b/d over the same period, quadrupling Egypt's oil import bill.
- Despite several proposals to increase capacity, we do not see refineries advancing over our forecast period. With refining capacity set to remain flat, imports of refined products are set to rise from 83,000b/ d in 2011 to over 370,000b/d by 2021.
- Although gas production is expected to grow from 61.1 cubic metres (bcm) to 82.1bcm in the 2012-2021 period, consumption will rise at an ever more rapid pace, from 52bcm to 76.9bcm. Gas net exports, especially through LNG will fall over the forecast period as Egypt's consumption increases sharply.
- In spite of disturbances reducing exports to Jordan to 16% of contractual agreement we see trade links to persist.
- Much is expected of recently elected President Mohammed Morsi. Egyptian General Petroleum Corporation (EGPC) and the other state companies will continue to push their own licensing rounds, hoping that the political challenges will not ensnare investment in upstream hydrocarbons projects. Results of the EGAS 2012 licensing round will come throughout H1 2013.

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