After Break with Qatar, Egypt Faces Natural Gas Shortages

(Washington Post) Erin Cunningham - When Egypt's military ousted President Mohamed Morsi last summer, it also broke political ties with his chief financial patron, natural gas-rich Qatar. Now, dwindling natural-gas supplies are expected to trigger nationwide blackouts. In a bid to avoid a crisis, Egypt's government has raised the price of natural gas, which generates at least 70% of the country's electricity. Egyptian leader Sissi's new Persian Gulf benefactors - oil giants Saudi Arabia, Kuwait and the United Arab Emirates, all Qatari rivals - don't have the gas exports that Egypt needs. Under agreements with Egypt's state-run energy companies, foreign firms exploit and produce the country's gas reserves. Because Egypt heavily subsidizes the gas it distributes to domestic consumers, international oil companies send some of the gas they produce in Egypt to the more lucrative global market, where they can sell it for much higher prices. But the Egyptian reserves have been steadily declining and are now insufficient to generate power and also supply the foreign firms.

2014-05-23 00:00:00

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