LONDON, Jan. 12 (UPI) -- The Egyptian natural gas sector is on track for an about-face, though complex dynamics could keep pressure on the industry, Wood Mackenzie found.
Italian energy company Eni in December secured the bulk of the new exploration and production concessions offered by the Egyptian government during the latest bidding round. The company made its initial gas discovery in the Zohr field in August 2015 and quickly described it as the largest ever made in regional waters and potentially the largest in the world.
A profile of the Egyptian gas sector from consultant group Wood Mackenzie finds the sector is on pace for a profound change in the next five years.
"After swinging from the world's eighth largest liquefied natural gas exporter in 2009 to the world's eighth largest LNG importer in 2016, the wheel is set to turn again," a report emailed to UPI found.
Egypt in November secured a three-year, $12 billion loan from the International Monetary Fund to help facilitate inclusive growth. The IMF said the government in Cairo is making progress on much needed reforms, though subsidies at the consumer level already on the table for energy are not crafted wisely and benefit mostly those above the poverty level.
The IMF, however, said the economic potential for Egypt is "immense" and significant investments in the energy sector and major new natural gas discoveries are contributing to its potential.
According to Wood Mackenzie, the Egyptian gas market "will be inundated" with new volumes from some of those discoveries. Production levels should reach a record of 7.3 billion cubic feet per day within six years.
Egypt aims to become a regional hub for gas and LNG, though availability at the domestic sector could complicate growth.
"Better gas availability for domestic sectors -- power especially -- could exacerbate seasonality through the demand response," the report read. "Our analysis suggests that over the production ramp-up period, seasonal LNG imports could be needed to cover demand in the peak summer months, while excess gas could be available for LNG exports in the winter."