RESEARCH & ANALYSIS
The Russia-Ukraine War’s IMPACT ON THE OIL & GAS MARKET BY JOLLY MONSEF, MARIAM AHMED & YOUSTINA MOUNIR
In February 2022, Russia invaded Ukraine causing the largest food and fuel crisis since World War II. The war significantly affected most economic sectors nationally and worldwide, the most roiled one is the oil and gas sector as Russia is the world’s largest oil exporter to global markets.
GLOBAL IMPACT 1. CRUDE OIL & NATURAL GAS AVERAGE PRICES CRUDE OIL ($/bbl)
NATURAL GAS ($/mmbtu) 108.29
71.52
83.04
74.45
85.57
91.60
112.28 101.51
106.08
94.12
6.71 3.87
Dec
Jan
Feb
2021
Mar
Apr
2022
Dec
4.26
4.46
Jan
Feb
2021
4.98
Mar
Apr
2022
2. CRUDE OIL & NATURAL GAS INVENTORIES WITHDRAWAL CRUDE OIL* (mmbbl)
NATURAL GAS (bcf)
4
Jan
Jan
Feb
-32
Feb
Mar
-32
Mar
11
Apr
*US & OECD Commercial Inventory
10 | EGYPT OIL & GAS NEWSPAPER
2022
-994 -653 -156 190
Apr
2022
www.egyptoil-gas.com
3. PETROLEUM & NATURAL GAS SUPPLY & DEMAND PETROLEUM & OTHER LIQUIDS (mmbbl) Supply
US NATURAL GAS (bcf/d) Supply
Demand
115.86
100.78
98.10 98.22
97.41
Dec
Jan
2021
99.33
98.66
99.09
98.19
97.37
Feb
Mar
Apr
2022
108.57
116.85
96.12
102.47
Demand
107.45
89.80 79.85
95.77 87.66
77.07 Dec
Jan
Feb
2021
Mar
Apr
2022
4. OPEC+ ACTIONS VS. NOPEC BILL OPEC+ ACTIONS Meetings in 2022
NOPEC BILL US Congress Passes NOPEC bill to Curb OPEC’s Monopoly
Adjust Upward the Monthly Overall Production By:
Feb, 02 Mar, 02
A Foreign State Is Prohibited from Collective Actions:
0.4 mmbbl/ d (For March & April)
Mar, 31 May, 5
Decisions
0.432 mmbbl/ d (For May & June)
- Limits the production or distribution of oil or natural gas products - Sets or maintains the price of oil or natural gas products - Restrains trade of oil or natural gas products
5. RUSSIAN OIL & GAS SUPPLY, EXPORTS Russia is the main supplier of crude oil and natural gas globally. As a result of its war on Ukraine, the European Union, being one of the largest importers, proposed a ban on Russian crude oil exports and planned to shift its liquefied natural gas (LNG) imports
RUSSIAN CRUDE OIL AND CONDENSATE IN 2021
Production
Exports
RUSSIAN NATURAL GAS IN 2021
10.5 million bbl/d 14% of the world’s total supply
762 bcm
+ 45% of its production
+ 27% of its production
MAJOR IMPORTING DESTINATIONS FROM RUSSIA IN 2021
Natural Gas
Crude Oil and Condensate
74%
OECD Europe
49% 13%
Asia and Oceania
38% 13%
Rest of the World
13%
6. INTERNATIONAL OIL COMPANIES' OPERATORS IN RUSSIA After Russia invaded Ukraine, several major companies abandoned the Russian market.
Companies
Energy
Oil Field Services
bp Equinor Shell ExxonMobil TotalEnergies
Schlumberger Baker Hughes Halliburton
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RESEARCH & ANALYSIS
Impact on Egypt A. Economically The increase in oil prices is going to affect the Egyptian economy in several ways including the state's budget, fuel prices, commodities prices and inflation rate…. etc. Some of these effects were immediate while others may arise in the short term.
FY
1. OIL & GAS SECTOR WITHIN STATE'S BUDGET PETROLEUM SUBSIDIES (EGP billion)
2021/22
18.4
Growth Rate (YoY)
2022/23
52.6%
28.1
(Targeted) FY
AVERAGE BRENT CRUDE OIL PRICE
Brent price increased by $20 bbl in the FY 2022/23 budget compared to that of FY 2021/22. BRENT PRICE ($/bbl)
FY 2021/22
FY 2022/23
60
80
In FY 2022/23 budget, every $1 increase in the global oil price over the estimated price in Egypt’s budget will result in budget deficit by more than EGP 1 billion.
2. OIL TRADE BALANCE Thanks to refining & petrochemicals expansion projects, the oil trade balance managed to achieve a surplus in the beginning of 2022. Yet, after the Russian invasion and the global increase in oil prices, the oil imports bill could be elevated. OIL TRADE OVER (JAN-FEB) 2022 Exports ($ billion)
Crude Oil
OIL IMPORTS BILL Imports ($ billion)
0.591
Expected Oil Imports Bill in 2022
0.406
$ 12 billion
Value Petroleum Products
1.61 1.107
3. FUEL PRICES In line with the global increase in oil prices, the fuel Automatic Pricing Committee in Egypt has increased the fuel prices.
IN Q2 2022
Increased by
Product
The 5th Increase in Fuel Prices
EGP 0.25 per liter
Price (EGP/L)
Octane 80
Octane 92
Octane 95
7.50
8.75
9.75
Diesel Fuel
6.75 12 | EGYPT OIL & GAS NEWSPAPER
Industrial-use Mazut
EGP 4,600 per ton
www.egyptoil-gas.com
4. INFLATION & EXCHANGE RATE CORRECTION (%) The increase in fuel prices hit all sectors and boosted the prices of all commodities. Accordingly, the inflation rate in Egypt witnessed an upward trend. To reduce the negative effects on the Egyptian economy, the Central Bank of Egypt decided to raise interest rates by 1% in March and then by 2% in May. INFLATION RATE (%)
EXCHANGE RATE CORRECTION AGAINST THE DOLLAR 13.1 10.5
8.8
7.3
EGP 15.6 - 18.2
Average of 17%
2022 Jan
Feb
Mar
Apr
B. Natural Gas & LNG Market 1. SUEZ CANAL LNG CARRIERS TARIFFS
SCA canceled the 15% rebate granted to LNG carriers.
In mid-March 2022,
* This is a step taken by Egypt to significantly increase Suez Canal transit tolls in order to boost revenues.
EXPORTING MARKETS
2. NATURAL GAS & LNG EXPORTS
N
Egypt is one of the world’s leading natural gas and LNG exporters. In 2022, it was ranked 14th of global natural gas
- Egyptian LNG Export to Europe
producers, the fifth regionally, and the second in Africa,
- Around 10-15 %
producing 58.5 bcm. Egypt has the potential to be a regional energy center, especially for Europe. EXPORTING MARKETS
NEW AGREEMENT TO INCREASE EGYPTIAN LNG EXPORT TO EUROPE
EGYPT'S LNG EXPORTS
NATURAL GAS EXPORTS VOLUME IN 2021 EXPORTING MARKETS(1st time since 2011) To The Netherlands
- Egyptian LNG Export to Europe
- Around 10-15 %
- 4X Exports of 2020
6.8
Announced Date
April 2022
EGAS & Eni
Total - Egyptian LNG Export toCapacity Europe
- The Highest in 10 Years
Exporting Port
EGYPT'S LNG EXPORTS
mmt
Parties
NEW To AA
Targeted LNG Exports
3 bcm
174,000 m - Around 10-15 %
3
Damietta Plant
EGYPT'S LNG EXPORTS
LNG Tanker To Argentina (1st Time Since 2013)
To The Netherlands (1st time since 2011)
Gaslog Glasgow
To The Netherlands (1st time since 2011)
LNG EXPORTS VALUE & VOLUME EXPORTING MARKETS Value ($ million)
Total Capacity
Feb 2021 - Egyptian LNG Export Exporting Port to Europe
184
270.65%
LNG Tanker
NEW AGREEMENT TO INCREASE EGYPTIAN LNG EXPORT TO EUROPE
174,000 m3 Feb 2022 - Around 10-15 % Damietta Plant
682
Gaslog Glasgow
No. Of Cargos Total Capacity Announced Date
April 2022
Parties
Exporting Exporting Port Port EGAS & Eni LNGTanker Tanker LNG
EGYPT'S LNG EXPORTS
VolumeTo (mmt) The Netherlands (1st time since 2011)
2020 2021
*The Highest Since 2011
1.5 Total Capacity
To Argenti
2
174,000 m3 Targeted LNG Exports
Damietta and Damietta Plant Idku Plants 3 bcm
Gaslog Glasgow The BW Brussels & the Stena Clear Sky
To Argentina (1st Time Since 2013)
Growth Rate 174,000 m3
333%
No. Of Cargos
2
6.5* Exporting Port
Damietta Plant
Exporting Port
Damietta and Idku Plants
LNG Tanker
Gaslog Glasgow
LNG Tanker
The BW Brussels & the Stena Clear Sky
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