Egypt – energy, population and economy

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 [1]. However, population has ballooned from 36 million in 1970 to 81 million in 2012 and energy consumption has swollen in line with population growth [2].  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 [2]. Debt : GDP stands at a manageable 81% but Egypt can ill afford to allow this to grow indefinitely [3]. 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) [1]. 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 [4].

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 [2]. 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 [2]. 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 [5].

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 [6]. 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 [7]. 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 [7]. 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.

[1] BP: Statistical Review of World Energy 2013
[2] UN: National Accounts Main Aggregates Database
[4] Energy Information Agency: Egypt
[5] Wikipedia: Demographics of Egypt
[6] Wikipedia: Egypt
[7] Egyptian Ministry of Trade and Industry

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16 Responses to Egypt – energy, population and economy

  1. Willem Post says:

    Rationally, there is only one solution. Reduce the population by a factor of 10, and place the remainder on a strict energy and other resources diet. It will take a 50 – 100 year period of implementation. The longer it is delayed, the worse it gets.

    • Willem,

      while I agree on the need to reduce population and per capita energy/resource consumption, I am afraid there is no way this can happen “rationally”.

      If so, I would argue we would not come into these kinds of troubles in the first place!

      For instance, who in the world is happy with lowering the salary and celebrating the small step towards sustainability?


  2. Hi Euan,

    Nice post. I like the link between gdp and energy in Figure 6. It is impressive that the per-capita gdp has more than quadrupled over the last 40 years. This is large enough that I suspect that any measure of social welfare for Egypt will have improved over this time period. Maybe you or another reader would have a comment on this.


    • Euan Mearns says:

      Dave, I think you are probably right but I’m unsure how to measure it. As a wild guess I’d bet that 90% of the GDP is produced by 10% of the population. There is oil and gas production, a large refining sector, tourism, agriculture and the military. I’d guess the haves have quite a lot and the have nots will be unemployed and dependent upon state handouts. And so, while the have nots are probably better off than they were 40 years ago I’d bet the gap has also widened.

      it would be good to know how the energy is being used – gas consumption has grown to consume all production. Is it being used in petrochemicals? Or are they building CCGTs and providing electricity to parts of the population for the first time? I need some well informed Egyptian bloggers to chip in with details.

      Part of my plan is to look at many countries and then to start making comparisons, for example Egypt, Syria, Turkey, Libya and Algeria. But this weekend, I’m looking at Russia.

    • Euan Mearns says:

      I think this is part of the answer to your question

      • Hi Euan,

        “I think this is part of the answer to your question”

        Yes, I believe it is. Per-capita electricity production is up 230%. The lot of the average Egyptian family has improved, greatly. This means we can ignore comments like “Reduce the population by a factor of 10.”

        The human development indices for Egypt have also been improving during the time period


        • Hi Euan,

          “As a wild guess I’d bet that 90% of the GDP is produced by 10% of the population.”

          The top 10% earn 8 times as much as the bottom 10%. Compares with 16 for the US and 14 for the UK. Still, it is not clear inequality is an issue in Egypt.


          • Roger Andrews says:

            I can’t find the reference now, but I remember reading a short while back about a group of sociologists who built a computer model to simulate human economic interactions. They populated it with people with the same amount of money and the same level of ability, fed them the same career and investment opportunities and set the computer running. At the end of the run 20% of the people had 80% of the money. It seems to be an unavoidable part of the human condition.

            On the other hand it is nice to know that there’s at least one computer model that replicates observations. 😉

        • Alfred Nassim says:

          “The human development indices for Egypt have also been improving during the time period”

          Hi Dave,

          I really don’t want to dwell too much on Egypt. I may have been born there, but that was a very long time ago and it was really another place. I mean, when you go back to London after 10-20 years away, you quickly realize that it has not really changed that much. Cairo is another story.

          IMHO, economists and Bolsheviks know a lot about numbers, but very little about quality. Egypt may have many more schools and teachers than it did when I last lived there in 1962, but the quality is no longer there. The schools are operating in shifts with on reduced hours to cope with the number of kids. The Egyptian literary, film, radio and TV is crap compared to what it used to be like. We used to avidly read books by loads of local authors as well as translations into Arabic of the classics – from French, Russian and English. That is no longer possible even for the wealthy.

          Authors like Naguib Mafouz were born before WW1 and their best work was done before WW2 – he got the Nobel Prize for literature in 1988. He was murdered in Cairo by someone who considered the fiction he wrote half a century earlier offensive.

          IMHO, we are way past peak intelligence. I think the longer you go back in my family, for example, the smarter they were. My kids think they are smarter than me because they have iPhones and similar. They may get excellent marks at school, but I consider them quite ignorant compared to myself at their age. The books they read – Roald Dahl etc. – are fun but not challenging in any way. Sorry for digressing.

  3. BAU says:

    Good info Euan! Looking forward to the rest.

    I have the feeling it will end badly for Egypt.. A huge relatively poor population with subsidized fuel and food turning net importer.. I wonder how long SA / UAE are ready to fork over billions in aid to keep the place afloat.. I can’t see the populace accepting higher prices for food and fuel without riots.

  4. Alfred says:

    I was born in Egypt in 1950 – Anglo-Egyptian father and Irish mother.

    I have vague recollections of Cairo burning in the distance. I remember quite clearly the 1956 war. We lived a short distance from a military airport (Almaza) and the then presidential compound. We had a tank under a mango tree across the street – with a one-armed sergeant who liked to show us kids his tank. On the roof of our house was a light anti-aircraft gun and we were not allowed up there. After air-raids, we liked to collect the shrapnel. Once, we were having a family lunch – a very formal affair – when a French Dassault Mystère flew down the street past our dining-room windows. We could clearly see the pilot as the aircraft was on level with the table. Middle Eastern wars were relatively innocent in those days, although my father nearly perished. His truck got through unscathed while escaping from Sinai. The last truck, only a few minutes behind his was shot up by the advancing Israelis. Only the driver and his mate (Deeb and Salah) escaped because they were able to escape through the side not under attack.

    We left in 1962. We were very fortunate to get away and left almost everything of value behind. We had lived like princes in Egypt and moving to a middle-class English existence was something that my parents never managed to adapt to. Our family home is currently the HQ of the Egyptian Ministry of Social Welfare. Legally, we still own it. When I tried to take a picture of it 5 years ago, they threatened to call the police.

    When I was born, Egypt had around 20 million inhabitants and now it is over 80 million. Cairo was 3 million and is now perhaps 20 million. The mind boggles.

    Historically, Egypt was always fuel-poor. There were very few trees and those that were there were not for logging. The wood that the Ancient Egyptians used for building boats with came from places like Lebanon, Syria and Cyprus. Cairo was largely a quick-food society, because cooking only made sense in large quantities. Even when I was a kid, people would prepare a potato/tomato/onion dish and send it to the baker to be cooked next to the bread. I have absolutely no idea how Egypt will survive with 80+ million people in an age of declining oil, gas and tourism. Furthermore, they have blown all their chances at industrialising like China by allowing imports of manufactured goods without getting anything deals in return. Egypt could be a fantastic exporter of vegetables and fruit to Europe – but the EU will not allow it. It is ridiculous that places like the Netherlands should use their gas for heating up hothouses to grow crap produce when the sun is for free in Egypt.

    Personally, if I were running the country, I would aim to merge with the East of Libya – where most of the oil is. Of course, this would not please the Americans, Brits and Israelis, but to use the famous words of Victoria Nuland “F**k the West.”

    • Willem Post says:

      You echo my thoughts about Egypt’s “well-being”.

      David Rutledge, in light of the comments by Alfred, do you really think Egypt with 80 million people is better off than when it had 20 million people in 1950?

      Egypt has been, is and will on the road to misery for many decades to come.

    • Euan Mearns says:

      Alfred, thanks very much for your insight. One of my objectives here is to try and stimulate informed debate about energy and society. But we have to live with facts. Egypt’s population is 80 million. It used to export energy to Europe but will shortly cease doing so. What new fields are in the pipeline? What sensible bilateral trade arrangements may benefit both EU and Egypt? In recent past it’s been energy one way and tourists the other.

      Willem, your comments are welcome but lean far towrads the Malthusian side of the debate. Egypt has 80 million souls that are not going to disappear without a fight.

      I’m really interested to know and understand the real reason for The Arab Spring. Do Egyptians believe that democracy or religion will bring prosperity? Do they want prosperity or some form of blissful Medieval ideal where life expectancy was 40 and infant mortality huge? There has to be an acceptance throughout humanity of rights and responsibilities.

  5. Alfred says:


    Thank you for your most informative website. I regularly put links to it in discussions at the end of articles. Most readers of the FT seem to think that the US will soon be sending so much gas to the EU that the Russians are not needed, for example. I know it sounds crazy to most people here, but that is what the MSM leads them to believe.

    I think it is far too early to count Egypt out – despite the 80m people. It is worthwhile remembering that before the British took over, Egypt was throwing its weight about and occupied much of today’s Greece, Palestine, Syria and Saudi Arabia. They need another Muhammad Ali – an Albanian BTW.

    “I’m really interested to know and understand the real reason for The Arab Spring.”

    I am not in a position to really know. You should ask the Americans and Israelis. Religion is a huge red-herring and has been much used by outsiders to screw up the Egyptians.

    Like I said, they need someone who is so scary that they all step into line. The present president is also head of the Army. He clearly is working for outsiders and not for Egypt so he is not the right person. I am not saying he is not scary, just that he is as corrupt his predecessors and everyone can see that. Muhammad Ali dealt with other countries as an equal. No one thought that he was there to milk the place or that he kept his money abroad.

    That is why the West is so scared of Putin, and the MSM loses no chance to vilify him. Everyone knows that he is doing his best – within his constraints – for Russia. Yeltsin was their favourite.

    • Euan Mearns says:

      Alfred, any assistance posting links around is much appreciated. One link on the FT this weekend brought me a few hundreds hits – that was on Blackout Britain.

      I’m unsure how the US shale gas and oil story ends. Many agree that the Bakken and eagle Ford liquids plays will peak and decline within a number of years – devil in the detail. With gas who knows – I keep an infrequent watch on the drilling data. But the US seems to be building LNG export terminals, I just don’t see them ever being used.

      I suspect the Arab Spring was grounded in socio economic factors and spilled over to tribal and political factors. Hard to see that it is doing the Libyans and Syrians much good.

  6. Oldfarmermac says:

    Malthus will soon be having the last bitter laugh in countries such as Egypt.I didn’t save the link but some time back I ran across a web site that had a number of the stories of typical Egyptian citizens posted.

    One such story was that of a man who was a minor official in a major city in the buildings inspection department.HE supplemented his salary-a relatively good one – by working daily as a moonlighting carpenter and furniture maker…

    He was just barely able to feed his kids and this was a couple of years ago or longer.

    I am a big believer in the power of the Invisible Hand but it is not attached to the end of Superman’s arm and it can only work if it has something to work with and time to do so.Technology cannot possibly save Egypt barring a miracle of Biblical proportions.It might be within the realm of possibility to irrigate enough of the desert near the NIle to grow food enough for the population if the energy needed for doing so were available and the necessary fertilizers were likewise available and money in hand to pay for it all.

    Right now the bankers of the world are among the most hated of all the symbols of ”business as usual” and just about every body in the environmental movement sees them as the enemy.I must admit that this is my own mindset also to considerable extent.

    But I wonder sometimes because they continue to make it possible for countries like Egypt to borrow money that in my estimation as a realist –not an economist – can never be repaid.

    There can in my view be only two basic explanations for this.One is that they are so ill informed in respect to the realities of energy and other natural resources that they believe the money they are lending is actually going to be repaid with interest.

    The other is that they know the loans are money down a rat hole but that they don’t dare say so or do anything differently because as individuals they are small cogs in a monstrously big machine. Think of pre bankruptcy General Motors for instance. Any manager worth even a tenth of his salary must have recognized many year s ago that the company was inevitably headed for insolvency given it’s obligations and bloated costs.But such a manager couldn’t do anything to solve the problems originating outside his own area of responsibility and pointing them out would have resulted in his termination rather than his promotion.

    If I had any money I would make very sure to keep it as far as possible away from the hands of bankers who lend to countries such as Egypt for fear of losing it.

    And if I had any friends in such a country I would be doing everything I could to help them get out while getting out is still at least possible.

    Things are going to get very very bad in Egypt within another decade or two at the most. When I think of all the little kids there who will starve or die fighting over a scrap of bread it —-

    The thing is that we humans are just as subject to the laws of nature as every other living thing although we have managed to finesse those laws temporarily due to natures one time gift of fossil fuels.When the fuel is gone and Egypt cannot borrow any more money — and money is not something that can be printed in unlimited quantities.

    Money is only a marker or a bookkeeping device used to make it possible to conduct business efficiently.But a wheel barrow full of hundred dollar bills wouldn’t have sufficed to buy even one truckload of apples from our farm last year because we didn’t have any due to late frost.

    I can say as an agricultural professional that food production can be expanded to feed the world for another few decades but only if the actual material inputs are avail able. Money can’t buy stuff that doesn’t exist and money cannot manufacture thing such as clean salt free water – at least not in quantities sufficient to irrigate deserts.

    The entire world taken as a whole is in overshoot but it is not going to manifest equally in all places and on the same time frame.Large portions of Africa are in the throes of terminal Malthusian overshoot any given year.

    Just about all of what I refer to personally as ” sand country ” meaning the part of the world that is extremely dry and hot but blessed or cursed with oil and natural gas is on the same path.The only hope of the people there is to get out before the oil runs out.

    There will be not just millions of refugees but tens of millions and the rest of the world is not going to be in a position to accept them even if it wanted to.

    We will be lucky to avoid WWIII when the fecal matter starts hitting the fan in earnest.

    That will be just about anytime within the next few decades.

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