Egypt's Oil and Gas: Some Crucial Issues

Egypt cannot afford to ignore the need to make some difficult decisions regarding its energy sector. Energy is of crucial importance for economic development for obvious reasons:

Author(s): Robert Mabro

Publication Number: ECES-DLS25-E

It is a critical input of both agricultural and industrial production. Modern transport cannot function without oil in most instances and gas in some cases. Energy is fundamental to the welfare of populations even in its most humble applications such as cooking, washing and lighting. Energy, of course, has to be affordable but not so cheap as to result in waste or because of subsidies indiscriminately given to rich and poor as to inflict on the government a crippling budgetary burden. Investments in energy—power stations, gas liquefaction plants, pipelines, refineries, storage, exploration and development for oil and gas—are very capital intensive and require huge amounts of scarce resources. Investment projects and all decisions relating to investments such as the terms of agreements with foreign entities require rigorous assessments of costs and benefits to the economy, that is, of true opportunity costs.