Tarek El Molla Egypt's minister of petroleum and mineral resources said the UAE was one of the first countries to have supported Egypt after the 30th of June revolution by granting it shipments of petroleum products without waiting for procedures like signing contracts or mutual agreements.

Afterwards he added the UAE has provided Egypt with oil products for a year via an agreement between the Egyptian General Petroleum Corporation (EGPC) and the Abu Dhabi National Oil Company (Adnoc).

"We have received $3.7 billion worth of products."

"We look forward to continuing and developing such a strategic cooperation and providing all necessary facilitations to increase the UAE's investments in the Egyptian oil industry" El Molla said during an exclusive interview with Khaleej Times.

Many countries can benefit from the UAE's successful way of dealing with subsidising oil products he pointed out adding that his participation in the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) was proof that Egypt wants to benefit from the Emirati experience in optimising new and renewable energy resources.

Regarding the reasons behind dropping oil prices and its effects on the flow of global investments to the Arab region and Egypt in the field of research and exploration El Molla said decreasing prices are caused by the abundance of crude oil inventories and the abundance of supply amid slowing global demand.

Coordination must

He expects prices to not start climbing up until 2017 and that the current situation requires cooperation and coordination between Opec members and other oil producers as well.

The falling prices have impacted revenues of Gulf countries he said but they have succeeded in minimising negative impacts by the wise management of natural and financial resources as well as learning from previous global oil crises.

However El Molla said the cost of oil extraction is lower in the Arab region than in several other countries which makes it an economically feasible opportunity to attract global investments.

He also praised the UAE's successful strategic approach which it adopted several years ago to diversify its income resources and not depend solely on income from oil sales.

And for the effects of falling oil prices on Egypt the minister said Cairo benefits from that decrease with regard to its subsidies bill that has reached LE63 billion in the current budget and that it might drop to less than LE50 billion in case the price per barrel remains at the $40 level.

However El Molla pointed out that petroleum products are still being sold in Egypt at prices lower than their production cost which makes it "difficult to link to global oil prices".

Still he said the positive effects of falling oil prices also include a decline in the cost of importing Egypt's needs of petroleum products like gasoline diesel and butane gas which amounts to 15 per cent 30 per cent and 50 per cent of its needs respectively.

El Molla also said the petroleum sector in Egypt aims at increasing production of crude oil and condensates in 2016 to reach 700000 barrels per day which is 15000 more barrels compared to last year.

"We also aim at increasing natural gas production to reach 4.7 billion barrels daily which is 400 million more barrels than the current production" he added.

Natural gas supply

The minister said 2017 will witness the entry of many natural gas projects into production including the first phase of the North Alexandria project at a daily production rate of 700 million cubic feet and the first phase of Shorouk Gas project at a daily production rate of 900 million cubic feet.

"These projects will help in decreasing the quantities of liquid natural gas that Egypt is currently importing at daily rate of one billion cubic feet" he added.

El Molla added that Egypt is confronting its energy crisis by implementing a number of procedures to close the gap between supply and demand by 2020 including encouraging new projects in research and exploration reducing the dues of foreign companies to $3 billion instead of $3.6 billion and negotiating with these companies to adjust the prices at which they purchase their shares of natural gas through the current agreements in order to encourage them to increase exploration activities.

The minister added that deformations of energy subsidies in Egypt will be fixed within a period of three to five years in addition to organising the trade of natural gas in the local market.

Finally El Molla said that 2016 will witness an introduction of three international biddings for oil and gas exploration 25 new agreements worth $5.4 billion beginning production at eight projects in gas field development worth $2.1 billion at a daily rate of 450 million cubic feet and operating two new projects in the fields of fertilisers and petrochemicals at over $3 billion worth of investments.

- The writer is the managing editor of Al Ahram Al Massai.