On Efficient Utilization of Egypt's Energy Resources: Oil and Natural Gas

Abstract

The focus of this research is analysis and forecast for Egypt's energy resources of oil and natural gas. Running a risk of an oil shortage in the near term, Egypt's strategic energy policy should shift from oil towards multiple energy sources including natural gas, oil, and alternative energy uses. The approach applied to Egypt's energy resources is based on optimal resource extraction rates (Hartwick's model) whereby dynamic efficient production schedules, conditional on the constraint of sustainable growth rates in consumption, dictate future energy requirements. Detailed strategies for Egypt's energy sector are proposed, accompanied by their expected impacts on the economy: (1) a sustainable production path for oil and natural gas as strategic energy resources until 2025, (2) reduction and ultimate removal of energy subsidies by 2017 with oil subsidy removal by 2010, (3) required investments for energy self-sufficiency estimated at $120 billion over ten years for natural gas and 5.25% annual investment growth for oil through 2020, and (4) timeline adoption of alternative energy sources including solar and nuclear energy to substitute oil with 10% alternative energy use by 2015 and 25% by 2025.