Petrochemicals Industry In Egypt

All about Egypt began during the era of Pharos. Pharos is the vernacular term often used to name the monarchs of ancient Egypt; even Petrochemicals building blocks (like ethylene) were noticed to be produced during the era of Pharos. They have been using gas obtained from the fermentation process of fig plants, and this gas was ethylene. Moreover, Bitumen was discovered among materials used in pyramid construction and embalming operations to preserve pharos bodies after death.  Egypt's petrochemical industry relies on benefiting from locally produced natural gas by adding value to Egypt's reserves. However, during the last century, Egypt took its first steps towards the petrochemical industry and touched this rich field by establishing it in the Suez Governorate. The Egyptian state has paid great attention to this strategic industry. Egypt had a clear and robust vision focusing on supporting the Egyptian economy and a step towards reaching self-sufficiency.  <h2 style="text-align: justify;">Stages in Petrochemical Industry  </h2>The petrochemical industry in Egypt witnessed a remarkable and gradual development from the late 1940s until the beginning of the 21st century through three main stages: First Stage This represented the starting point of the Suez Governorate. Then, in the mid-seventies, two urea factories were established in Talkha and Alexandria. In the eighties, a petrochemical complex was established, a unit for producing linear alkyl benzene at the Amreya Oil Refining Company in Alexandria. It contracted, followed by activity in the nineties with the establishment of Sidpec - Sidi Kerir Petrochemical Company—investment in partnership with the petroleum sector, then Orientals Petrochemical Company (private sector). Second Stage  At the beginning of the year 2000, the national plan for the petrochemical industry in the Egyptian state was drawn up, targeting 14 giant complexes, 24 projects, and 50 production units, with investments of about $20 billion over 20 years. Third Stage This was the stage of real growth and launch due to the giant commercial oil and gas discoveries, which represent a basic pillar in the petrochemical industry, starting in 2014.  <h2 style="text-align: justify;">Challenges in Petrochemical Industry  </h2> Scarcity of Raw Materials  This is due to the growing interest in switching to alternative, clean feedstock. Oil and Gas Prices Volatility  It is refined and processed to obtain a variety of feedstock like gasoline, ethylene, propylene, and others. Feedstock prices are very sensitive to fluctuations in oil and gas prices; let's take oil as an example of price volatility when it reached about $138 a barrel from 2005 to 2008.  Then, from 2014 to 2015, oil prices slumped to less than $34 a barrel in 2015. The price went to a sharp decline at the beginning of the COVID pandemic suffering from lockdown and the consequences of the pandemic.  At the beginning of 2022, and because of the Russian military operations in Ukraine, prices rose and crossed the level of $100 a barrel again.  These sharp price fluctuations significantly affect the petrochemical market, leading to uncertainty and loss of investors' appetite.  <h2 style="text-align: justify;">Petrochemical Projects in Egypt  </h2>The production of the petrochemical sector in Egypt reached about 4 million tons during the fiscal year 2020/2021, achieving a growth in revenues by more than 50% annually. Egypt is currently examining strategic projects to support achieving a regional oil and gas trade hub. Considering its distinguished strategic location, the Ministry of Petroleum and Mineral Resources has embarked on the implementation of several petrochemical projects across Egypt; investments in these projects are estimated to value about $18 billion:  From 2014/2015-Present Below are two projects considering the largest in Egypt that have been operated, with a total investment valued at more than $4 billion.  East Mopco Expansion Project (Damietta) The <a href="https://www.mopco-eg.com/" target="_blank" rel="noopener">project</a> opened in May 2016, aiming to produce urea and ammonia to cover the local market's needs. The project's production capacity is about 1.38 million tons annually, at an investment cost of about $1.96 billion. Ethylene and Derivatives Production Project (Alexandria)  The project was opened in August 2016, with a production capacity of about 460 thousand tons per year of ethylene, which is used in the production of about 400 thousand tons per year of low and high-density polyethylene, in addition to more than 20 thousand tons per year of butadiene, which is characterized by the adoption of many small and medium industries. It includes industries such as construction materials, pipelines, plastic packaging, and many other industries. The investment cost of the project amounted to about $1.93 billion.    Power Station Established at Ethydco (first and second phases)  It helps to generate the electric power needed to operate the ethylene complex and its derivatives. Turbine shutdown condition, with the total cost of the two phases being approximately $150 million. In March 2019, Ethydco's startup was achieved. The strategy of the petroleum and mineral sector wealth to advance the petrochemical industry and attract more foreign investments is ongoing; Egypt is currently developing several new and promising projects that aim to maximize the benefit, which will have many positives and a strong impact on Egypt's national economy. Many petrochemical projects are being implemented at a total cost of about more than 8 billion dollars, including: WoTech for Medium Density Fiberboard (MDF)   The <a href="https://www.wotech-eg.com/" target="_blank" rel="noopener">Wood Technology Company</a> aims to produce about 205 thousand cubic meters per year of MDF based on nearly 245 thousand tons per year of Egyptian rice straw as raw material with a total investment volume of about 217 million Euros. Methanol Derivatives Production Project (Suez Company for Methanol Derivatives) It aims to produce about 87 thousand tons annually of urea formaldehyde and about 53 thousand tons annually of sulfonated naphthalene formaldehyde SNF, depending on the methanol and urea producers produced by E-mthanex and MOPCO, with a total investment volume of about $119 million. It was scheduled to be completed in the last quarter of 2022. Red Sea Petrochemical Complex Project  It is located in the economic zone of the Suez Canal, which aims to establish a petrochemical complex. The project is estimated to process about 4 million tons of imported crude oil annually to produce about 2.7 million tons annually of petrochemical products and about 1.2 million tons annually of petroleum products, with a total investment volume of more than 7.5 billion dollars.  The project's foundation stone was laid in June 2021; the Red Sea Petrochemical project is considered the first industrial complex for petroleum and chemical materials in the economic zone. Refining and Petrochemical Complex in New Alamein City As a continuation of the petroleum sector's approach in supporting the state's approach towards building major economic entities that contribute to easing sustainable development in the new urban communities, the refining and petrochemical complex in New Alamein City is witnessing progress in its development work, especially after the establishment of the El Alamein Project Company in September of 2021 to develop the complex, as is currently being done.  They are taking the necessary measures to establish a utility company according to the master plan and supplying the entire El Alamein complex projects with their utilities, industrial gases, and logistical services. The El Alamein complex includes many projects with total investments exceeding about $10 billion. The refining and petrochemical complex project includes investments estimated at about 8.7 billion dollars, as it aims to produce about 3.2 million tons annually of specialized petrochemical products, in addition to about 1.6 thousand tons annually of petroleum products based on about 3.8 million Tons of crude oil produced from the fields of the Western Desert. El Alamein complex projects also include the project for the production of sodium carbonate soda H, which aims to increase the added value of the natural resources available in Egypt, represented in raw salt and limestone, by producing soda H with a design capacity of about 600 thousand tons annually, about 100 thousand tons annually of sodium bicarbonate, and 50 thousand tons annually of other specialized materials, with estimated investments of about $480 million. Signing the Shareholder Agreement  To establish the Misr Methanol and Petrochemicals Company for producing methanol, ammonia, petrochemicals, and others between Abu Qir Fertilizers and Chemical Industries Company, Helwan Fertilizers Company, and Al Ahly Capital Holding Company.  It aims to meet the needs of the local market of methanol and its derivatives and export the surplus abroad, as the investment cost of the first phase is more than $1.6 billion, and a production capacity estimated at one million tons of methanol and about 400,000 tons of ammonia annually. and attracting foreign investment. According to the National Petrochemicals Plan 2035, the Ministry of Petroleum and Mineral Resources is studying the establishment of the Soda Ash project, with a total investment volume of about $420 million, a project to produce metallic silicon and its derivatives and the titanium dioxide project, with a total volume of investments of about $300 million,  Other projects are under study and sponsored by <a href="http://echem-eg.com/" target="_blank" rel="noopener">ECHEM</a> such as:  <ul style="text-align: justify;"><li data-leveltext="" data-font="Symbol" data-listid="1" data-list-defn-props="{"335552541":1,"335559683":0,"335559684":-2,"335559685":720,"335559991":360,"469769226":"Symbol","469769242":[8226],"469777803":"left","469777804":"","469777815":"hybridMultilevel"}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Studying the production of polylactic acid to be established at <a href="http://www.sidpec.com" target="_blank" rel="noopener">Sidpec – Sidi Kerir Petrochemicals Company</a></li><li data-leveltext="" data-font="Symbol" data-listid="1" data-list-defn-props="{"335552541":1,"335559683":0,"335559684":-2,"335559685":720,"335559991":360,"469769226":"Symbol","469769242":[8226],"469777803":"left","469777804":"","469777815":"hybridMultilevel"}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Understanding the production of green naphtha from algae and seaweeds </li><li data-leveltext="" data-font="Symbol" data-listid="1" data-list-defn-props="{"335552541":1,"335559683":0,"335559684":-2,"335559685":720,"335559991":360,"469769226":"Symbol","469769242":[8226],"469777803":"left","469777804":"","469777815":"hybridMultilevel"}" aria-setsize="-1" data-aria-posinset="3" data-aria-level="1">Studying the production of super-absorbent polymers SAP. A study of a project has also been achieved; it is the project for the logistics services company for petrochemicals PLS, as well as the completion of the renewal of the cells of the chlorine plant in the Egyptian Petrochemical Company, and the developments of the company's expansion project as well as the rehabilitation of the   </li></ul> VMC factory and the Modernization of the PVC factory Two chloride removal units were established to increase its production capacity to about 200,000 tons annually, and another project targeted to increase production capacity in <a href="https://www.elab-eg.com/" target="_blank" rel="noopener">Elab</a> by about 40% of the current capacity.  These strategic projects aim to maximize the benefit of the available natural resources in the Egyptian state by producing high-quality products.   <h2 style="text-align: justify;">Green Petrochemicals and Egypt's Vision 2030 </h2>Within the sustainable development strategy framework, Egypt's Vision 2030 is to produce specialized products that comply with environmental standards to keep pace with global trends for preserving the environment. Several projects to produce green petrochemicals have been included in projects under development.  Green Biodegradable Plastic Production Project  With a production capacity of about 75 thousand tons annually, it uses state-of-the-art <a href="https://marsad-ecss-com-eg.translate.goog/70009/?_x_tr_sl=ar&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp">process</a> technologies to produce biodegradable polymers in packaging films, bags, other packages, and medical uses.  Renewable and Environment-Friendly Projects The second is Renewable and alternative safe on the environment, to produce green naphtha to be exploited in the new city of Alamein to produce green petrochemical products. Plastic Waste to Oil and Hydrocarbon Projects The third project converts plastic waste into oil and higher-value hydrocarbon to be integrated into existing facilities. The volume of production capacity is estimated to be about 30 thousand tons annually, and the volume of investments is about $50 million, and it targets to reduce about 63 thousand tons annually of carbon dioxide.  It is worth noting that the petroleum sector continues implementing many green projects to preserve the environment.  <h2 style="text-align: justify;">New projects on the Egyptian State and Fitch Agency </h2>The new projects, planned for implementation and completion, are characterized by a strong return. They will be built on about 1,600 acres in the industrial zone in New Alamein City, with a total investment volume estimated at $10.5 billion. To produce more than 6 million tons of specialized and unconventional petrochemical and chemical products annually. It is not produced locally, which will reflect positively on the New Alamein region, as it is considered a promising industrial backyard for establishing many strategic, primary, and complementary industries.  It aims primarily at achieving the sustainable development goals targeted by the Egyptian state in the region, and the specific plans for establishing these projects are being implemented on the highest level of modern and advanced technology and techniques, as well as benefiting from successful experiences globally in this field. The Fitch Solutions agency report on Egyptian chemical exports is among the most prominent reports issued by international institutions that deal with Egyptian affairs in various fields. According to the report, the production of the petrochemical sector in Egypt amounted to about 3.34 million tons during the fiscal year 2020/2021, as the report indicated. According to data from the Ministry of Petroleum and Mineral Resources, this led the petrochemical sector to achieve a growth in revenue rates of about 50% year on year. The agency stated that the new projects being implemented by the Egyptian state in the petrochemical sector include the methanol derivatives project in Suez, with a total investment volume of about $119 million, the Egyptian bio-ethanol project, with a total investment volume of about $112 million, and the Red Sea Petrochemical Complex project in Ain Sukhna, with a total investment volume of about $112 million. $7.5 billion, which aims to add about 3.7 million tons annually to the production capacity of petrochemicals, and the Alamein Petrochemical Complex, with a total investment volume of $8 billion and a production capacity of about 4.7 million tons annually of petrochemicals. In its report, the agency indicated that the projects implemented in the petrochemical sector would make the Egyptian state an oil and gas trade hub, according to its strategic location. 2015 to 2020, with an increase in the value of exports from about $3.1 billion in 2015 to about $5.2 billion in 2019, while it declined by about 11% in 2020 to reach about $4.7 billion due to the impact of the Corona pandemic on global trade. Fitch Solutions indicated that the Egyptian economy will likely achieve sustainable growth by transitioning from dependence on imports to an orientation towards exports and stressed that locally manufactured products have become more competitive abroad. Several companies will likely expand their industrial activity in Egypt and benefit from large labor markets, good logistics, and access to regional markets.  <h2 style="text-align: justify;">Future Plans for the Egyptian Petrochemical Sector </h2>The Egyptian petrochemical sector is firmly looking forward to promising prospects to attract investment thanks to its highly competitive advantages. Therefore, the Egyptian state plans to transform into a regional energy center by expanding oil and gas projects. The Egyptian government has been paying great attention to the energy sector recently. It started implementing several considerable projects in the field of petrochemicals to provide its needs of oil derivatives, which cost the state's general budget double burdens because of importing them from abroad, as the state believes that the implementation of an integrated and sustainable energy strategy is one of the most important pillars of economic and social development, especially. The petrochemical industry, especially as it represents great importance in achieving added value, advancing production, and improving the economy's pace locally and abroad, made it take serious and rapid steps towards attaining self-sufficiency in products.      This article was contributed by our expert <a href="https://www.linkedin.com/in/ihabyahia/" target="_blank" rel="noopener">Ihab Yahia</a>  <h3 style="text-align: justify;"> </h3><h3 style="text-align: justify;">Frequently Asked Questions Answered by Ihab Yahia</h3> <h2 style="text-align: justify;">1. What are some of the challenges faced by the petrochemical industry in Egypt, and what opportunities exist for further development and innovation?</h2>Egypt witnessed challenges during the past decade: political, logistics, and the COVID-19 pandemic. Due to the global recession and currency devaluation, although the Petrochemicals sector survived and sustained despite this turbulent situation, the number of projects and efforts to study added more. The Egyptian government can transform its role in the economy into an enabler, regulator, and supporter of the private sector, helping the petrochemicals sector grow and become more competitive while providing a more conducive environment for business and investments.  <h2 style="text-align: justify;">2. What is the anticipated future trajectory of green petrochemicals in Egypt, and how does it contribute to the overall growth and competitiveness of the industry?</h2>Egypt targets 50% of green petrochemicals by 2035, aligned with UN sustainable goals in this context. You find examples on the ground, like MDF from rice straws in Wotech and the production of green methanol. Also, you find progress in developing green projects in Egypt, such as the recovery of hydrocarbons from plastic waste, Green Naphtha from Algae, and the production of Polylactic acid from glucose.  <h2 style="text-align: justify;">3. How do these petrochemical projects contribute to local industry development, job creation, and skills enhancement within Egypt's workforce?</h2>The petrochemicals industry in Egypt contributes about 12% of Egypt's GDP, attracting around 7% of Egypt's workforce. My opinion, I consider the <a href="https://www.petroleum.gov.eg/en/update-project/Pages/about-the-project.aspx" target="_blank" rel="noopener">Egypt Modernisation Project</a> a role model for the sector where the Egyptian oil and gas sector embarked on a modernization project, which aims to design and implement an integrated transformative program for Egypt's Petrochemicals and adopts a strategy to fulfill people aspirations further.  <h2 style="text-align: justify;">4. What factors drive investments in the Egyptian petrochemical sector?</h2><ul style="text-align: justify;"><li>Egypt is a ready-built market</li><li>It enjoys an excellent geographic location  </li><li>Proximity to target markets</li><li>Egypt is a member of economic alliances and is involved in several trade agreements (MERCOSUR - COMESSA and others)</li><li>Efficient banking sector</li><li>Egyptian skilled workforce   </li></ul>

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