NPR Story
2:59 pm
Wed May 9, 2012

As Egypt's Economy Stalls, Energy Sector Booms

Originally published on Wed May 9, 2012 5:19 pm

Transcript

MELISSA BLOCK, HOST:

Egypt is not a major energy exporter compared to its Middle Eastern neighbors, experts believe the country does have significant untapped reserves, especially in deepwater natural gas. The nation's oil and gas sector has attracted billions of dollars of investment from global energy companies, and that's despite the ongoing political unrest.

From Cairo, Julia Simon reports that critics in Egypt say these partnerships are selling the Egyptian people short.

JULIA SIMON, BYLINE: A large clock looms over the lobby of the Egyptian state-owned petroleum company, as employees shuffle back and forth across the floor. Men in suits sit expectantly with briefcases on their laps. It's the final minutes of Egypt's most recent bid round, an auction of large blocks of land to energy companies that hope to find oil or natural gas.

Today's bid features 15 parcels of prime Egyptian real estate - both on shore and off-shore - some in the West, some in Sinai, some in the Gulf of Suez. The deadline draws near and then the clock strikes noon. The men in suits begin to file out. The bid round is officially over.

ADEL SAID: Early next week, we'll start evaluating the offers.

SIMON: Adel Said is the deputy CEO of the Egyptian General Petroleum Company. It decides which energy companies get which blocks of land. Said says Egypt's revolutionary unrest has not discouraged its international energy partners, companies like Shell and Houston-based Apache.

SAID: We have very good interest from our partners and the different companies there for our bid round.

SIMON: But Amr Adly, of the Egyptian Initiative for Personal Rights, says it's important to remember that most of the 148 standing agreements between Egypt and the energy companies were negotiated before the revolution, under the Mubarak regime

AMR ADLY: And the regime itself was not accountable. The parliament itself was not legitimate in the sense that it was not really like fairly elected. And the parliament was not really supervising - it didn't have any power, really, like there's a real executive. And when nobody is following up how the officials are behaving, and the officials are not really accountable to anyone, then you may end up with the most absurd of all terms.

SIMON: Some terms that are now in question are part of the 2010 deal with BP for the extraction of deepwater Mediterranean gas. While many details of the deal have not been made public, it has many critics, says business journalist Nadine Marroushi.

NADINE MARROUSHI: And a lot of people really are saying that the deal that was signed is financially not favorable.

SIMON: BP officials would not comment on the record about the 2010 deal. But Adel Said, of the State Petroleum Company, says it is fair and that the new era of hard-to-get energy requires new models of compensation.

SAID: You know, now we have an exploration in ultra-deep water. And the investment is very, very high - it's a huge investment. So there is a certain type of model of agreements to match with the huge investments in such concessions.

SIMON: Still, Amr Adly says it's hard to know if the deals are fair because of the widespread lack of transparency in Egypt's energy sector. He says while the government does publish the official agreements with the international energy companies, many details - like the price of gas and quantities for export - aren't available to the public.

These numbers only come out in rare court cases, like a recent investigation into associates of ousted President Hosni Mubarak who are accused of selling gas at below market prices to Israel. Adly says this is public money, and the Egyptian public has a right to know the details.

ADLY: Not just the contracts but even like the financial details. So the whole idea is make things open, get some sunlight in and let's see.

SIMON: Because in this transitional moment, with more bid rounds in the coming months and many more deals to sign, Adly says the government's decisions could shape the fate of Egypt's natural resources for generations to come.

For NPR News, I'm Julia Simon. Transcript provided by NPR, Copyright National Public Radio.