a map of gas exploration on Egypt

1. EGYPT’S
NATURAL GAS
MARKET OVERVIEW

2. 2
Egypt’s Gas Industry Milestones
1st gas
Discovery
1967 1976 1981 1992 1996 2003 2012
1st
Industrial
customer
1st
Residential
customer
1st CNG
Vehicle
Private
LDC
1st Gas
Export
1st FSRU
Tender
2015
1st LNG
import
Gas
Regulator
2017

3. 3
0
10
20
30
40
50
60
70
80
90
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
BCM/yr
Nooros Fields West Delta Deep Marine West Nile Delta Project
Zohr Total production
Historical and Forecast Gas Production (by area)

4. 4
Zohr Gas Discovery
• The Largest gas discovery in the Mediterranean.
• One of the largest gas discoveries in The World.
• 30+ TCF of GAS in place
• 1.5km water depth , 100 km2 acreage, 220km from shore
• Significant potential in adjacent Blocks

5. 5
A 500 mmcfd capacity Floating Storage and
Regasification Unit (FSRU) was installed
at the Port of Sokhna on the Red Sea and multi-
year deals have been concluded with LNG
sellers.
A second FSRU, with a capacity of 750 mmcfd,
was commissioned in November 2015 alongside
the first at Sokhna
In August 2015, Eni announced the Zohr
discovery, a new play opening find with an
estimated 21.5tcf of recoverable gas reserves.
With a fast track development planned, Zohr will
help to reduce the need for costlier LNG imports.
This new source of gas will help Egypt to lower its
cost of supply and, if followed by further
discoveries, could see Egypt return to a period of
energy self sufficiency
Source: Woodmac – Seek Permission, OIES
61.3 63 61.9
57
48.5 44 41.6
47 46 45.1
36.1
28.9
23.9
18 14.7 12
0.3 0.4
5
15.3
23.6 39.4
43.7
48
49.3
48.3
45.5
3.6
10.3
10
10.3
2.8
2.8
-10.4 -9.4 -7.7 -3.7 -1.4 -0.8 -0.7 -0.7 -0.7 -0.7
-2.9
-4.8 -8.7 -10.1 -11.5
Production online
in 2015
New gas production
(2015)
LNG
imports
LNG
exports
Gas balance (BCM)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Due to the ongoing energy shortage
Egypt began importing LNG in 2015
LNG imports act as bridge for next upstream production

6. 6
Egypt as the new Energy Hub in the Mediterranean
• Major recent huge gas discoveries (Zohr)
• Oil & Gas infrastructure (LNG Facilities, Pipelines)
• Centered looking in the middle of resource-rich countries and major energy
consumers, as well as availability of major Int. Maritime Trade lines.
EMG P/L
FAJR P/L
Damietta LNG
Idku LNG
East Gas P/L
AQABA
FSRU
FSRU
ZOHR

7. 7
Source: World Steel Association, BP Statistical Review, GIIGNL
LNG Reports
Steel production
Ktn/yr
Gas
production
LNG
imports
0
10
20
30
40
50
60
70
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017 0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
LNG helps growth in the Egyptian steel
industry
Gas & LNG
imports (BCM)
Steel production
‘000tn/yr
LNG imports enable
steel plants to continue
to operate
Rapidly deployed FSRUs import
LNG until new fields were in
production
This allowed $457mn steel to
be exported, using idle
capacity, keeping the lights on
with significant financial and
environmental saving vs
alternative fuels
with greater than anticipated
demand led to costly
fuel and power shortages in Egypt
Falling domestic production
Gas fuels economic growth

8. 8
Gas Usages
Gas Grid
Local Distribution
Gas Delivery
Fertilizers
Industry
CNG
Domestic
Power
Gas Value Chain in Egypt

9. 9
Natural Gas Supply vs. Demand vs. Consumption
Going forward, Egypt will witness a growth in natural gas production from “supergiant” Zohr.
Producing currently 0.349 BCF per day, to reach 1 BCF per day in June and 2.7 BCF by end of 2019.
Additionally importation through gas el sharq will start beginning of 2019.
Egypt consumption of Natural gas is increasing by higher rate than worldwide consumption Despite
the drop of production in the last four years, turning Egypt from being a gas exporter to gas importer
With the new discovery of Zohr, net gas imports are expected to be covered by local production.

10. 10
Abu sir
West Abu Qir
North Idku
Raven
Scrab/
safron
LNG
Damietta
Arish &
El masaid
Baltem
Port said
Hap’y
Theka
North
Bardwell
Akhen
Naf
Roseta
El Sheikh
Zowayed
East Port Said P.S & Ind. Area
East Gas
Flower
North Sinai
Helm
Temsah
Talkha
Shabshir
Abu Madi
Abu Qir
Abu Hommos
South El
Mansoura
Mahmudiya
Qara
Tanta
South
Belquas
Abu sultan
6 October
Qusina
Banha
Sadat
Suez
A’youn
Moussa
Mostorud I-A
Tebbin
Koraymat
Ras Bakr
Beni Suef
Za’frana
October
Unit 103
El Menia
Assuit
Unit 104
Unit 108
Zeit bay
Abu Rudis
Morgan
Ramadan
Esma 8
Agiba
Sea bird
Shoab Ali
Badri
Esma 2
Sinai Cement &
industrial Area
Sedi Krier
Ameriya
King
El-Max
Intergene
Borg
Elarab
Ameriya
Cement
12“- 14 Km
El obyed
Salam
South Aum Barkah
El Qasr
Tarek
Bed - 2
Abu Sannan
South
Dab’aa
Meleha Deep
Bed - 3
Bed - 1 265 Km 24“-
Qena
Luxor
Aswan
Kima
Hurgada
Safaga
Cairo
Neag
A/GH
Karoun
South
El-Tina
West
El Tena
Jordan
Denise
Taurt
El Gamil
UGDC
South El
Manzala
Shams
Saffaire
Simian/ sienna
Fayroz
Robi
Tarouse
Theth Med. South
East Fields
Vegas fields
Desouk
A/R
Suco
Belayim
Wastani
Fayoum
El Sokhna
• Existing . PL
• Under cons. PL
• Future. PL (5 Years)
• Gas fields
• Future Gas Fields
• Facilities
• Distribution Stations
• Power stations
• Industrial Areas
• Consumer
• Distribution Co.
• Export
Ameriya
24“- 26 Km
18“- 12 Km
16“- 9 Km
24“- 26 Km
24“- 26 Km
32“- 160 Km
24“- 14 Km
30“- 26 Km
22“- 87 Km
24“- 25 Km
32“- 75 Km
24“- 215 Km
32“- 85 Km
28“- 86 Km
42“- 40 Km
30“- 28 Km
16“- 256 Km
16“- 192 Km
24“- 10 Km
22“- 40 Km
24“- 50 Km
36“- 196 Km
36“- 264 Km
10 BCMY
20“- 660 Km
20“- 40 Km
12“- 40 Km
National Oil, Gas Grid & Facilities
Dahshour
Nubariya
North Port Said
Port Fouad
Sharm El Shikh
Suco
West
Aswan
Ras Shukir
El Fayoum Offtake
Deshna
Quos
New Assuit

11. 11
Natural Gas Consumption in numbers (till June 2018)
Source: EGAS annual report 2018
» 58 Power Generation plants
» 14 Local Distribution companies
» More than 2,491 Industrial Consumer
» 415 brick kilns
» 8.8 Million Residential Customer
» More than 18,776 Commercial customer
» 7486 Bakeries
» 243,688 vehicles converted to CNG
» More than 70 conversion centers
» 187 CNG stations

12. 12
Gas to end users
• Factories
Medium Heavy
- Chemical - Steel
- Paint - Cement
- Textile - Fertilizer
- Food
Fuels substitution & conversion
Water heating Space heating
Cooking Steam Generation
Furnaces Manufacturing Process Heat
Refrigeration Gas-fired Air-conditioning
Natural gas will replace:
• Diesel for water and central heating
• LPG for heating and cooking
• Fuel oil and diesel for industrial
applications
• Gasoline in cars
Residential
Commercial
Industrial
• Apartments
• Houses
• Villas
• Hospitals
• Schools and Universities
• Offices
• Restaurants
• Bakeries etc.

13. 13
Development of the Egyptian Gas Distribution Sector

14. 14
Gas Distribution – Deregulation Development
The Main National Grid / Trunk line is constructed & Operated by GASCO (on behalf of EGAS)
Everything down stream of the Pressure Reduction Station is within the cost of the LDC connection rate. Payments made “per converted customer”

15. 15
From ONE state monopoly …
… to 9 private sectors & 5 state-owned LDCs/EPCs
Development of the Egyptian Gas Distribution Sector
Off Take
P.R.S
Regulator
Regulator
Typical Downstream Gas Network
Ongoing Distribution Activities
8.8 Million customers connected
Over 1 bn $ of Foreign & Local investment
16 Egyptian Governorates covered by Gas networks
600 MM $ /Year Saved in subsidies
Enhanced HSE Standards
Introducing new technologies
Attracting the Multi-Nationals
Social Investment – Jobs/Employment - Environmental
Provide a better quality of life for Egypt’s citizens

16. 16
 Well developed gas grid;
 The end consumer price and margin are
regulated;
 Conversion is undertaken only by the CNG
companies;
 Local codes in place governing all technical
and HSE aspects;
 Conversion loans were offered through CNG
companies till mid. 2003, now through
commercial banks;
 The Government is the sole supplier of the
gas, and the sole owner of the supply grid
nationwide
Compressed Natural Gas “CNG” Business Model

17. 17
Deregulation Development – Egypt’s CNG Market
Phase I
1992 - 1996
Phase II
1996 - 2002
Phase III
2002 - now
Pilot Project National Project Expansion
2 Pilot Projects
With the assistance
Of 2 IOCs
Monopoly
2 State-Owned
(JV with IOCs)
4 Private
“NGVs”
(Local & Int.)

18. 18
Market based Incentives: CNG Smart Card
18
Mechanism
Financing 100% of cost of conversion through
commercial lending on a debit card to be
presented at fueling stations by converted
vehicles’ drivers
Increase
No. of Vehicles Converted

19. 19
Gas Sector Governance
• The new Gas Law, paves the way for a substantial reform of the gas sector.
• The law mandates the creation of a new independent gas regulator.
• Offering an opportunity to the private sector to enter and compete in wholesale
downstream market segments, the existing shadow regulator finalized the gas
transmission codes, gas transmission tariff, which will be published soon.
The Egyptian Government has approved a new Gas Law.

20. 20
Lessons from Egypt - Making it work
 Supply and infrastructure
 Role of private sector
 Support from international institutions
Full involvement of investors & distribution companies
 Capital intensive industry
 Slow but steady returns
 Involvement in the whole supply chain
 Consumer education
Commitment from international institutions
 Financing collective infrastructures
 Support for micro-credits
 Exchange of good practices
 Regulations
 developing adequate framework using experience from well established and
structured market
 opting for a cylinder deposit system
 banning cross-filling
 establishing a licensing system

21. 21
 Access for poorer classes and implication of taxes
 developing an efficient network
 financing solutions such as micro-credit
 eliminate taxation of LPG and cylinders (import duties and VAT)
 harmonizing the tax system (in case partial taxation is maintained)
 Support from governments
 Stability of the political and legal systems
 Rules governing trade and investment
 Regulations concerning industry operating and safety standards
 Involvement in fair tax / duty treatment
 Awareness & Consumer’s Adherence
 Openness to change
 education campaigns
(schools, associations, role of village heads)
- safety
- applications
 advertising campaigns by marketers
Lessons from Egypt - Making it work

22. 22
Enablers
•Strong multilateral support, FDI
•Subsidy regime (initially)
•Clear cost recovery model for LDCs
•Free trade zones
Blockers
•Cost recovery mechanism for upstream, power sector
•Subsidy regime (later)
•Regulatory environment
•Customer payback
•Security of supply for large industry
•Connection fees
•Monopsony buyer
Opportunities
•Regional gas hub
•Modernisation programme (subsidy phase out)
•Regulatory reforms and capacity building (direct sales)
•Efficiency opportunities
Policy enablers, blockers and opportunities

23. 23
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