New gas pricing formula beckons

24 January 2003
The government is planning to announce in February its long-awaited new gas pricing formula, which will see gas delinked from oil prices. 'We need to delink the prices from crude oil and product prices,' Petroleum Minister Sameh Fahmy said in the keynote address at MEED's First Egyptian Petrochemicals Conference in Cairo on 22 January. 'We need to link the gas to some of the end-products, and of course a floor and a ceiling might be a good method to secure the prices for the buyers and sellers of long-term contracts.'

The change is seen as critical if the government is to achieve its long-term target of producing 15 million tonnes a year (t/y) of petrochemicals by 2021. Fahmy said that, under the $10,000 million petrochemicals investment plan, 24 projects would be undertaken which would generate annual export revenues of $4,000 million. 'We are going to have some share in each of these projects,' Fahmy said. 'We want to invite investors to invest in Egypt, but to have a win-win situation we need to be a part of that investment.

Egyptian Petrochemicals Holding Company (ECHEM), which is in charge of attracting investment into the sector, reiterated that guarantees would be offered for competitively-priced feedstock. 'Feedstock will be correlated with product price,' ECHEM chairman Moustafa Shaarawi said. 'We will have supply agreements to guarantee the supply of gas or naphtha as feedstock.'

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