Monitoring Economic Indicators from 500 Kilometers Up: Egyptian Oil and Gas Terminals

by Chris Biggers. This article was first published at Planet Stories.

Ain Sokhna Port, south of the Suez Canal. Image ©2017 Planet Labs, Inc. Left: Jun 2017 / Right: Feb 2016

From space, satellites monitor the movement of commodities that can affect the health of national economies.

In Egypt, they track Liquefied Petroleum Gas (LPG), one of Egypt’s most important commodities. With a rapidly growing population — more than 89 million — it remains crucial to many of the country’s domestic activities, particularly heating water and cooking. According to the World LPG Association, per capita consumption of the fuel is one of the highest in the world.

In the years following the Global Economic Crisis and the Arab Spring movement, access to fuel for cooking has proved challenging, but nonetheless continues to be a priority for the country. According to the World Bank, more than 75% of Egyptian households rely on LPG. The country consumes approximately 4.3 million tonnes of the fuel each year, of which 1.47 million tonnes is produced domestically while another 2.18 million tonnes is imported from abroad.

And more and more LPG may be making its way into Egypt from outside the country. At Planet, we’ve been observing the expansion of Egypt’s oil and gas infrastructure at Ain Sokhna — a port located about 40 km south of Egypt’s strategically important Suez canal. It’s there, Planet’s 3–5 meter resolution imaging satellites show Egypt in the process of building a third basin and expanding a liquid bulk terminal. The space snapshots show the erection of six new storage tanks to be associated with the expanded terminal which, upon completion, will hold additional LPG and gasoil. At the time of capture, the tanks were in various states of build.

Moreover, the port also happens to be home to Egypt’s Floating Storage Regasification Units (FSRUs) which pump about 20 million m3 per day of foreign natural gas to feed Egypt’s grid and commercial sector. They were chartered in 2015 for a five year period. In February, Egypt announced plans to push between 100 and 108 liquified natural gas (LNG) cargos through the terminals in 2017. Planet’s high cadence imagery has already captured these vessels arriving alongside the FSRUs at the port.

In recent years, natural gas has become a competitor to LPG as Egypt has moved to connect additional households to the natural gas grid through a prior World Bank funded project. Accordingly, over 355,000 consumers have been connected to the gas grid in the Greater Cairo area, alone. Through the project, the state plans to connect about 1.5 million households in 11 of Egypt’s 27 governorates. Most recently, France, an important partner in the region, pledged another 68 million euros to expand gas connections to 2.4 million households. However, overall progress has been slow.

Both imported LNG and LPG will likely be integral to reducing the magnitude of Egypt’s energy security problems, especially until Zohr — a “super giant” gas field in the Mediterranean — begins production in earnest. Zohr is estimated to contain a reserve of approximately 850 billion m3 of natural gas. Eni, an Italian energy group which discovered the field in 2015, projects costs for development around $14 billion, a substantial sum given gas companies are reducing global expenditures.

Egypt LNG terminal near Idku. Captured June 15, 2017. Image ©2017 Planet Labs, Inc.

Egypt LNG terminal near Idku. Captured June 15, 2017. Image ©2017 Planet Labs, Inc.

If all goes according to plan, Eni believes the field will produce 70 million m3 of gas per day by 2019. That gas may further support domestic consumption, further easing pressure on Egypt’s energy demands — especially if more households are connected to the grid. However, depending on price, Egypt could restart significant exports and still use LPG as it continues to construct additional storage capacity and import infrastructure. If that occurs, Planet’s imaging fleet stand ready to capture Egypt’s LNG liquefaction terminals near Damietta and Idku.

As of 2017, Damietta’s LNG terminal remains offline as Egypt sends more domestic gas production to the grid, a policy that’s helped ease electricity shortages. The situation is unlikely to change in the short term as disputes persist around Egypt’s decision to declare force majeure in 2014. However, as Zohr’s production increases in 2018, we could see significantly more cargoes leaving from Idku. In 2016 for example, Planet’s imagery captured 7 of the reported 9 cargoes at port while another 4 have already been observed in 2017.

In the meantime, despite returning GDP growth and an IMF-led economic reform program, the North African country remains under stress with high levels of unemployment, inflation, and increasing public debt. GDP numbers from the first quarter show a 1.7% decline compared to last year and consumption of LPG and other fuels remain taxing on the state’s coffers. In the first half of FY 17, Egypt has already seen a $2.11 billion fuel subsidy bill, a jump of 46% over the same time last year. According to Egypt’s Petroleum Minister, 50% of the subsidy is spent on diesel, 20% for LPG, 20% for gasoline, and another 10% for fuel oil and petroleum derivatives. Egypt’s officials expect to spend more than $8 billion over FY17–18 for the bill.

This entry was posted in Chris Biggers, Egypt, English, Intelligence.

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