In 2012 Egypt’s combined oil, natural gas and hydro production amounted to 1.87 million barrels oil equivalent per day (mboepd) and it is therefore an energy rich nation . However, population has ballooned from 36 million in 1970 to 81 million in 2012 and energy consumption has swollen in line with population growth . Once an exporter of oil and gas Egypt seems set to become an importer of both in the near future (Figure 1).
Decline in oil and gas exports and increasing cost of food imports resulted in Egypt’s trade deficit with the rest of the world growing to £12 billion in 2012 . Debt : GDP stands at a manageable 81% but Egypt can ill afford to allow this to grow indefinitely . Egypt needs a plan to boost exports and to use its energy resources to produce higher value GDP.
This is the first in a series of posts telling the story of key countries through the lens of energy, population and economy.
Figure 1 Oil and gas production less consumption provides a proxy for exports (and imports) . Oil exports have dwindled to zero and the Egyptian government has warned that gas exports may also cease this year. Egypt has no coal production and imports a small amount of coal. With debt:GDP = 81%, the loss of oil and gas export revenues combined with the prospect of mounting energy imports leaves Egypt in a similar fix to the UK where an escalating trade deficit must be financed by increasing debt.
Figure 2 Egypt’s oil production peaked in 1993 and has since declined slowly. In recent years decline has stabilised, perhaps due to natural gas liquids (NGL) from the rapid expansion of gas production. The combined primary energy production has been on a plateau just above 90 mbpd for several years. The EIA reports promising new discoveries awaiting development but it remains to be seen if these are sufficient to maintain production at current levels .
Figure 3 Egypt’s energy consumption has increased 11 fold since 1970 as the population has doubled (Figure 4) and per capita energy consumption has increased 5 fold (Figure 6).
Figure 4 Since 1970 Egypt’s population has more than doubled . A very large number of underemployed, educated young people, lies at the heart of social unrest in that country (Figure 5). GDP has increased 13 fold since 1970 . Half of that can be allocated to population growth. Surprisingly, GDP has not been severely impacted by the 2011 revolution although the rate of GDP growth may have slowed a little.
Figure 5 The population pyramid of Egypt, with burgeoning numbers of young people, is typical of countries in the developing world .
Figure 6 Growth in per capita GDP and per capita energy consumption are closely aligned. This is one of the most important messages I expect to emerge from this series on energy population and economy of selected countries. It is not possible to generate meaningful GDP without energy, and growth in energy supplies or increasing efficiency is essential for economic growth.
Figure 7 Cross plotting per capita GDP with per capita energy consumption shows how the growth in productivity of individuals is closely linked to growth in their energy consumption. This chart is a time series of data points beginning at 1970 bottom left and ending at 2012 top right. Somewhat worryingly for Egypt the efficiency of energy use to generate GDP has not increased since 1970, if anything it has fallen to $1528 per toe per capita. With 7.3 barrels of oil in a tonne and oil costing $110 / barrel the cost of 1 toe = $803. The Egyptian economy, therefore, is merely doubling the value of the energy inputs, and while I have not yet checked the data, I imagine that mature developed economies will lever much more value out of the energy consumed.
Figure 8 In 2003, the Egyptian government undertook economic reforms and since then bilateral trade grew rapidly but faltered in 2008 . Since then exports have been declining resulting in the current account balance creeping more deeply into the red, in large part due to the fall in oil and gas exports (Figure 1). In 2012, national debt stood at 81% of GDP, up from 70% in 2008. To stay solvent, Egypt needs a plan to grow exports and this must involve using energy more efficiently to generate ever larger amounts of GDP.
Figure 9 Malthusians take the view that Egypt is in overshoot, i.e. the population has grown beyond what the land can support. This view is borne out by the fact that Egypt’s trade in agricultural products (excluding cotton) with the rest of the world stood at a $6 billion deficit in 2012 . This amounts to half of the total trade deficit. The sudden expansion of the food trade deficit will reflect the global increase in food prices that has underpinned social unrest in many countries.
Figure 10 While Egypt has bilateral trade in agricultural products with many countries, the three largest trading partners are the USA, Russia and Ukraine . In recent years, there has been a sharp fall in imports from the USA compensated by a sharp rise in imports from Russia and Ukraine. One can only guess that this reflects prices and perhaps manoeuvring of the former Soviet Union for greater influence in The Middle East and North Africa.
 BP: Statistical Review of World Energy 2013
 UN: National Accounts Main Aggregates Database
 Energy Information Agency: Egypt
 Wikipedia: Demographics of Egypt
 Wikipedia: Egypt
 Egyptian Ministry of Trade and Industry