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Six multinational companies and financial institutions have
signed a memorandum of understanding
(MOU) with the National Bank of Egypt and Egypt's petroleum
ministry to accelerate decarbonization of oil and gas operations
and manufacturing facilities.
Egypt will be the host country for the COP27 Climate Summit, set
to be held from 7-18 November 2022.
Baker Hughes, Bechtel, Enppi, GE Digital, Petrojet, and UK-based
bank HSBC signed the MOU, according to a 23 February statement.
This type of partnership represents the country's ongoing
recovery from a revolution in 2011 and regime change in 2013, said
Egypt's Minister of Mineral and Petroleum Resources Tarek El Molla
this week.
Speaking at the CERAWeek 2022 by S&P Global conference in
Houston on 9 March, El Molla described how international oil
companies (IOCs), service companies, and investors have been
returning to Egypt since the government dedicated itself to
restarting commercial projects paused by political turmoil.
Beginning in 2014, the government published a new energy roadmap
"that was transparent with our IOC partners" aimed at returning the
country to self-sufficiency in energy and rebuilding its industrial
base. By 2018, Egypt was again a net exporter of natural gas and
had installed new gas-fired power plants that ended blackouts, he
said.
From 2014 to 2020, Egypt more than doubled its energy production
capacity from 23 GW to 51 GW, according to the Ministry of Planning and Economic
Development. This brought power to 99.7% of the population and
created an energy surplus that could open opportunities for
export.
Natural gas drives down emissions
Strengthening natural gas production and bringing more gas to
the power sector is key to the country achieving environmental
targets as well as economic goals, El Molla said.
The country submitted a nationally determined contribution (NDC)
in 2017, in accordance with the Paris Agreement to seek to limit
the global temperature rise to 2 degrees Celsius. However, Egypt's NDC does not set a
target for emissions reduction, unlike more than 130 other
nations.
Instead of cutting CO2 emissions, Egypt's NDC provides details
on the country's energy strategy through to 2035, which focuses on
expanding electricity access to the entire population, stimulating
economic growth, and ensuring agricultural productivity at a time
of drought and increasing environmental stress.
Today, natural gas provides 65% of the country's hydrocarbons,
and it could provide 100% by 2055, El Molla said. "We are
accelerating … the resource we have, which is natural gas," he
said.
On top of that, the country is poised to build a considerable
renewable power sector, El Molla continued. The nation targets 20%
renewable power generation in 2022 and 42% of by 2035. For
comparison, just under 9% of power in 2019 came from renewables,
and three-quarters of that was hydropower, according to the
International Energy Agency (IEA).
The planning ministry said in a report released last year,
"2020 Voluntary National Review," that it is projecting
renewables' share will be 32.5% in 2035, falling short of the
longer-term national target.
On the renewables side, the biggest accomplishment in recent
years is the Benban Solar Park, which opened in 2019. The
International Renewable Energy Agency says that Benban is the
fifth-largest solar park in the world, at 1.65 GW, and the largest
outside of Asia.
Wind also is on the rise. On 1 March, Lekela Power's West Bakr
wind farm in the Gulf of Suez was officially inaugurated after
beginning operations in the fourth quarter of 2021. At 250 MW, West
Bakr increased Egypt's wind energy capacity by 18%, according to
the Global Wind Energy Council.
LNG exports
Egypt's LNG export trends also illustrate its energy security
turnaround and contribution to reducing emissions, El Molla said.
In 2016, while recovering from the turmoil earlier in the decade,
the country began to import LNG and became one of the world's
largest importers, he said. By the end of 2018, it had reopened its
two export-oriented gas liquefaction facilities on the eastern
Mediterranean Sea coast, and it was a net LNG exporter of about 12
million metric tons in 2021.
In the fourth quarter of 2021, Egypt's LNG export orientation
shifted from Asia to Europe, where prices were soaring. "That's the
beauty of being on the eastern Mediterranean," he said. "Our
proximity … has given an edge to export to Europe." He said that
"most if not all cargoes" recently have been going to Europe, and
that's likely to remain that way while Russian gas flows are
limited.
Looking further ahead, El Molla said that Egypt is working with
Mediterranean neighbors Israel, Cyprus, and Jordan on supplying
more gas and LNG to Europe.
In February, Egypt and Greece signed an MOU to study a possible
subsea gas pipeline connection.
More investment needed
With more than 90% of Egypt's energy use coming from fossil
fuels, the country has a near-term goal of reducing emissions from
that sector—and that's where international expertise is
critical. Egypt produces approximately 580,000 b/d of
oil-equivalent, which ranks the country 27th in the world,
according to the IEA.
The partners of the new MOU are now assessing onshore oil and
gas facilities to target CO2 and methane emissions cuts and energy
savings, said Scott Reese, CEO of GE Digital, in a press statement
in February.
GE Digital spokesperson Kristen Kutz told Net-Zero Business
Daily by S&P Global Commodity Insights last week that the
partner organizations are starting with visiting sites for the
first project.
GE's role will be to "bring software solutions" to the effort,
she said.
Carbon capture, for which MOU partner Baker Hughes is an
experienced operator, is another potential project, as the CO2
could be used for enhanced recovery in Egypt's oil fields.
Siemens Energy, not a party to
the MOU, worked on the gas-fired power units installed in the last
several years, and it's also doing its part to reduce the nation's
emissions profile. Siemens said it's engaged in projects to replace
compression units on pipelines in order to improve energy
efficiency. At one compressor station, Dahshour, Siemens Energy
said it will reduce CO2e emissions by 120,000 mt/year through new
compressors and other equipment.
Needs for investment, equity
As the host of COP27, Egypt will have the opportunity to
emphasize the need for application of promises made at prior
climate meetings, El Molla said. "We will prioritize realistic,
doable … outcomes and a just transition" to a net-zero world, he
said.
Since the 2015 Paris Agreement, countries such as Egypt have
said that they can't solve their emissions problems or adapt to
climate change on their own. They need the world's wealthy
countries to deliver on their promise to fund developing nations
with $100 billion in climate
finance, El Molla said.
With that type of support, Egypt can pursue its goals of
providing reliable energy for its citizens and industry, while also
reducing emissions, El Molla said. But it can go a step further,
such as contributing to global decarbonization through LNG exports
and even green hydrogen.
In 2021, Egypt's Ministry of Electricity and Renewable Energy
and Siemens formed a pilot project to produce green hydrogen with
renewable power.
El Molla said the country hopes to have details on a
Mediterranean green hydrogen hub that it can announce at COP27. "We
are blessed with good sun and wind [conditions]," he said, "and we
think we can accelerate technology for green hydrogen."