E GY P S 20 20
FINANCE AND INVESTMENT SESSIONS
EGYPS 2020 HIGHLIGHTS KEY FINANCIAL EDGES OF EGYPT’S OIL AND GAS SECTOR
I
n the Egypt Petroleum Show (EGYPS 2020) Finance and Investment Summit, which was convened on the third and the last day of the show, February 13, four significant panel discussions gave insights into the financial side of oil and gas sector, motivating new investments, as well as shedding light on the government efforts to attract more foreign investments.
EGYPT’S ECONOMY: THE BIG PICTURE Kicking off the summit, H.E Dr. Mohamed Maait, the Minister of Finance, gave a keynote speech on Accelerating Investments to Fuel National Growth—the Egyptian Story. Maait discussed the latest macroeconomic developments, fiscal developments, as well as the external sector developments, affirming that such updates play a vital role in enhancing the financial prospects of the oil and gas industry. During his speech, Maait also highlighted how over the last four years and under the Economic Reform Program, the real gross domestic product (GDP) jumped from 4.2% in Fiscal Year (FY) 2013/14 to 5.6% in FY 2018/19. He added that “this year we hope to achieve around 6%. Next year, our target is to reach 6.4%.” On a global scale, the minister remarked that according to The Economist, Egypt is ranked the sixth in achieving one of the highest real GDP growth rates, compared to the Middle East and North Africa (MENA) and emerging countries. For the components of GDP, Maait mentioned that the contribution of net exports to GDP growth rate has improved from -1.9% in FY 2013/14 to reach currently around 2.3%, adding that “if we look at the contribution of investments, it also increased from 0.2% in FY 2013/14 to around 2.5% now.” For consumption, the minister remarked that it declined to 1.2% after recording around 4.5% in 2013/14. He stressed that “we carefully study our components contributing to GDP growth. We are happy that net exports and investments are contributing better than before. However, we are still looking at restoring the contribution of consumption to grow again. And we are taking many initiatives in this regard.” Maait affirmed that private investments are an essential core for nourishing the Egyptian economy.Thus,“our strategy for coming years is to encourage more private investments,” the minister said, adding that “we strongly believe that the private sector has to contribute more to our economy. We rely on it in creating more job opportunities, contributing more to our GDP, and become the main driver for our growth in the coming years.” Afterward, Maait shed light on energy subsidies saying that “we made a significant improvement in rationalizing energy subsidies which were 6.5% in FY 2013/14, but now we are less than 1%.” Moreover, the minister commented that “[rationalizing energy subsidy] is a significant measure of our economic reform. It gives us a space to reduce the budget deficit and achieve a primary surplus, [which will help] reduce our debt ration to GDP.” Affirming on that, Karim Saada, Al Ahly Capital CEO, delivered another keynote speech on Overcoming Uncertainty: A Roadmap to Efficient Energy Investments during which, he tackled the various prospects of financing and supporting the Egyptian oil and gas sector. “What we do is that we inject equity,” Saada said, adding that the banking sector spares no effort to attract investments and support the business structure of oil and gas sector.
INSIGHTS INTO GLOBAL OIL AND GAS INVESTMENT AND FINANCING The Summit comprised several panels. The first one provided insights into the financial challenges facing the oil and gas sector’s investments. The panel was moderated
26
EGYPT OIL & GAS NEWSPAPER
by Farouk Soussa, Vice President, Economic Research (MENA), Goldman Sachs. It presented five key figures; Regis Monfront, Deputy CEO, Credit Agricole Corporate and Investment Bank; Maria Martin, Head of Corporate Finance, Energean; Helmy Ghazi, Managing Director and Head of Global Banking Egypt, HSBC Bank Egypt; Thomas Hardy, Assistant Director, US Trade and Development Agency; and Karim Badawi, Vice President and Managing Director-Egypt and Mediterranean, Schlumberger. Speaking of global issues and its impact on energy transition, Monfront began highlighting the “impressive improvement in the situation of Egypt, which means that Egypt will become again a very attractive investment destination.” Additionally, he clarified that “energy transition is a long journey. It does not happen overnight,” noting that this transition requires shifting to a decarbonized economy. To achieve this, natural gas will have a major role to play, “and Egypt is blessed with significant natural gas resources.” Commenting on the changes occurring on the global landscape of the sector, Martin stressed that many investments were launched in terms of Environment, Safety, and Governance (ESG). She affirmed that “we start looking at the things that make us better.” With an eye on Egypt, Ghazi remarked that there is noticeable progress in the financial side of the oil and gas sector. He stressed that “the Egyptian oil and gas industry is one of the few sectors in Egypt, if not the only one, that was able to attract substantial partners across many years.” Furthermore, Badawi showcased the different projects that have been developed, clarifying that Egypt currently maintains a successful journey towards digitalization and
