Working Papers

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

Publication Number: ECESWP117-E

December, 2006

Author : Tarek H. Selim

Type : Working Papers

This research will tackle the topic of energy policy in Egypt on several fronts. Analysis of the world energy market (section 2) with reasonable estimates of future prices for oil and natural gas will be conducted, such that the "most likely" scenario from the US Department of Energy's Information Administration database will be utilized (Energy Information Administration 2006). This will be followed by analysis of the energy sector in Egypt including historical production, consumption, and net exports of energy resources (section 3). In addition, the research will tackle when and to what extent Egypt will turn into a net importer of oil, and analyze the trend of such behavior. Derivation of a time path for natural gas resource depletion, based upon proven reserves, and a forecasted timeline of natural gas consumption until 2025 will be conducted. This will be based upon comparative elasticity analysis (section 4) between oil and natural gas including the calculation of price elasticity, income elasticity, and energy/GDP elasticity for both resources, and the calculation of the elasticity of substitution between oil and natural gas. The analysis will also include an energy sustainability constraint (application of Hartwick's model) on resource extraction rates, with the objective of guaranteeing future expected energy demand, conditional upon GDP growth rate targets, which guarantee sustainable development (section 4). Energy sustainability analysis will incorporate alternative energy use including solar and nuclear energy. Policy recommendations will conclude the research (section 5).