Egypt has long been a significant player in the global energy market, known for its oil and gas production and its strategic position as a transportation hub for energy products. Despite facing political unrest and geopolitical challenges in recent years, Egypt continues to be a major energy force in Africa. The government recently revealed plans to expand natural gas exploration and increase investments in renewable energy over the next few decades.
As the second-largest producer of liquid fuels among non-OPEC countries in 2023, following Angola, Egypt has established itself as a key fossil fuel producer in Africa. Additionally, it was the second-largest natural gas producer on the continent in 2022, behind Algeria. Egypt’s gas production growth has been fueled by the development of several offshore fields, including the significant Zohr field. However, forecasts indicate that gas production may decline in the coming years as the Zohr field matures and due to recent exploration setbacks.
Egypt remains crucial in international energy transportation, operating the Suez Canal and the Suez-Mediterranean (SUMED) Pipeline. These routes connect energy markets across the globe, linking the Persian Gulf to Europe and North America. Furthermore, Egypt is the only country in the Eastern Mediterranean with operational liquefied natural gas (LNG) export capacity and the capability to import natural gas, enhancing its status as an LNG hub.
In terms of renewable energy, Egypt set a goal of 42 percent renewables ahead of the COP 27 climate summit, which it hosted in 2022. This target was later increased to 58 percent by 2040. However, in October 2024, Petroleum Minister Karim Badawi announced plans to lower the renewable energy target from 58 percent to 40 percent. This shift aims to prioritize the growth of Egypt’s natural gas sector.
Badawi emphasized the need for collaboration in the energy sector during the Mediterranean Energy Conference 2024. He urged stakeholders to work together to boost exploration efforts and attract more investments in natural gas.
Recent years have seen many international oil and gas companies sever ties with Egypt due to a lack of hard currency, leading to debts of billions. Now, Badawi is focused on rebuilding these relationships. Since taking office in July, he has met with major industry players, including Italy’s Eni, which plans to drill additional wells in the Zohr field in early 2025 to increase output.
Despite the renewed focus on natural gas, Egypt is advancing several renewable energy projects that indicate a diversification of its energy portfolio. In September, AMEA Power announced plans for Egypt’s largest solar photovoltaic (PV) project to date, which will enhance its wind and solar capacity to 2 gigawatts (GW) along with 900 megawatt-hours (MWh) of battery storage. The company intends to invest $800 million in two major projects in the Benban area, including a 1 GW solar PV plant and a 600 MWh battery storage facility. Egypt’s favorable climate, with an average of 9 to 11 hours of sunlight daily, positions it well for solar energy generation.
Another area of focus for Egypt is green hydrogen. In March, the government announced a goal of attracting $40 billion in investment for green hydrogen and clean technology projects over the next decade. Seven memoranda of understanding were signed with international partners, with projects planned for the Suez Canal Economic Zone. This includes $12 billion for the pilot phase and $29 billion for ongoing operations, as reported by Planning Minister Hala el-Said.
Egypt seeks to become a hub for green hydrogen and renewable energy, leveraging its strategic location between Asia, Africa, and Europe. As countries worldwide explore the potential of green hydrogen as an alternative to fossil fuels, Egypt’s abundant solar resources could position it as a leading producer and exporter of this clean fuel.
Looking ahead, Egypt plans to boost its natural gas exploration efforts with support from both public and private sectors. This focus on natural gas has led to a reduction in renewable energy targets, but ongoing projects and investments suggest that Egypt will significantly diversify its energy mix in the coming decades.
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