Egypt’s economy records growth rate of 2% in the second quarter - GulfToday

Egypt’s economy records growth rate of 2% in the second quarter


A ship in the Suez canal, near the Ismailia port city, in Cairo. Reuters

Egypt’s economy recorded an annualised growth rate of 2% in the second quarter of its 2020-21 fiscal year, and 1.35% in the first half of the same, Planning Minister Hala Al Saeed said.

Saeed says Egypt’s economy was expected to grow 2.8% in the third quarter, and 5.3% in the fourth quarter.

Egypt’s economy grew by 5.6% in the first half of fiscal year 2019-2020, Saeed said. Egypt’s fiscal year begins in July.

The World Bank (WB) has approved a $440 million loan to modernise the signalling and upgrade track on 763 km of Egypt’s 5,000 km rail network, the bank said in a statement.

Egyptian National Railways (ENR) will put $241 million into the project on the Cairo-Giza-Beni Suef section of the network, bringing the total cost to $681 million, the World Bank said.

Obstacles faced by ENR showed there was “margin for improving its performance, namely in the realms of operations, cost recovery, maintenance, and customer service”, it said.

Egypt has focused heavily on investment in transport and urban development infrastructure, seeking development finance to help fund the projects.

Meanwhile, oil and gas producer Cairn Energy is shifting its focus to a growth portfolio onshore Egypt from declining offshore fields in the British North Sea in a flurry of deals worth around $1.5 billion which it announced on Tuesday.

Cairn, with Partner Cheiron, agreed to buy onshore fields in Egypt’s Western Desert from Royal Dutch Shell for up to $926 million and sell its stakes in British fields Catcher and Kraken to private firm Waldorf Production for $460 million. “We’re transitioning from that portfolio in decline into one where we see that we can build greater cashflow generation into the future,” Cairn Chief Simon Thomson told a conference call.

Cairn, which produced around 21,000 barrels per day (bpd) last year, can boost its net share from the Shell assets to 50,000 bpd from 35,000 bpd within a couple of years, Thomson added. The deal would triple Cairn’s reserves.

Around $280 million of the payment for the Egyptian assets depends on the oil price and exploration successes. The deal is subject to regulatory approval and expected to close in the second half of the year.

Cairn and Cheiron plan to pay for the fields with a new reserve-based lending facility of up to $350 million, a joint junior debt facility of $100 million and existing cash, Cairn said.

Cairn is also in talks with no set deadline with the Indian government about an arbitration award worth around $1.7 billion, but Cairn is actively pursuing alternatives, such as selling the consideration or enforcement, Thomson said.

A subsea pipeline that would connect Israel’s Leviathan gas field to Egyptian liquefied natural gas (LNG) terminals could double Israel’s gas export capacity to Egypt, the Israeli energy minister said on Tuesday.

Israel started exporting gas to Egypt at the beginning of last year through an existing pipeline that runs offshore before crossing the north of the Sinai Peninsula overland. The gas can be liquefied at Egyptian plants of Idku and Damietta and re-exported to Europe or Asia.

Last month the two countries said they had agreed to plan the second pipeline.

The governments would promote the subsea pipeline “in order to double the amount of gas that we can send to the Egyptian LNG facilities,” Israeli Energy Minister Yuval Steinitz said in an interview.

Leviathan field, located 130 km (80 miles) off Israel’s coast, already supplies the Israeli domestic market and exports gas to Jordan and Egypt. Its shareholders include Chevron Corporation and Delek Drilling.

“At the end of the day, it’s up to the companies involved to decide, but since it’s very realistic, I believe that it will take a year or two and you should see such a pipeline,” Steinitz said.

Asked what capacity the new pipeline would have, he added: “I think to start with, we’re speaking about a possible 10 bcm (billion cubic metres annually), but it might increase in the future.”

Steinitz, in Cairo for a meeting of the East Mediterranean Gas Forum, said he was optimistic that demand for gas in Europe would be sufficient to make additional exports viable for at least the next 15 years, and that more rapidly growing demand in India also provided a promising market.

He also said that exports crossing the Sinai Peninsula by pipeline had not been affected by occasional attacks on gas infrastructure by militants operating in the area.

“You should always be worried, but so far there were no disturbances,” he said. “We were already exporting 14 months ... and it’s never stopped.”

Separately, Hilton Worldwide plans to open nine more hotels in Egypt by 2026, adding about 1,700 rooms, its regional head told Reuters.


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