Egypt turns to natural gas alternatives for powering electricity plants

Egypt is increasingly turning to fuel oil as a power source for its electricity plants due to the skyrocketing global prices of natural gas. An official in the petroleum sector explained that while plants typically run on natural gas, the recent surge in prices, now around US$ 28 per million BTU, has prompted a shift toward fuel oil.

Fuel oil currently makes up 10% of the fuel mix used in these plants. Although slightly less efficient than natural gas, the significant cost savings make it a more attractive option. The speaker noted that efficiency gains are modest in the summer but become more pronounced as winter approaches. Meanwhile, demand for natural gas has dropped by nearly 14% compared to the summer, likely due to the colder weather.

Medhat Youssef, the former Vice Chairman of the Egyptian General Petroleum Corporation, highlighted the steep price difference: one million BTUs of fuel oil cost around $16.10, while the same energy from natural gas, including transportation, costs about $30. This translates to a 50% cost advantage for fuel oil. Youssef advocated for boosting fuel oil supply by importing more crude oil and boosting domestic production, rather than paying higher prices for refined fuel oil.

He explained that importing crude oil and refining it domestically would not only facilitate the production of various high-value petroleum products but also help reduce the cost of importing petroleum products, a crucial advantage given the global price surge.