Egyptian oil – looking through the rumour mill

On first appearances, the fact that there appears to be abundant information about Egypt’s oil and gas sector would seem like a sign of transparency, a well managed information dissemination system allowing citizens to know what is going on with their extractive industries.

Under more scrutiny, however, it reveals the opposite. The information available contains contradictory figures and reports about the oil and gas sector on a daily basis and it seems as though raw information released through outlets one would assume to be reasonably reliable is being overwhelmed by rumours and popular gossip, to the detriment of accountability of the sector.

There are many international institutes and organisations monitoring Egyptian extractive industries, in pary because of the country’s geopolitical importance. These organisations, as well as government agencies and companies, produce a lot of data about a range of things such as company activities, trade figures and environmental impacts. Nor is Egypt is a newcomer to the business; while it might not be a major hydrocarbon producing country comparable to Saudi Arabia, it has a significant history of oil and gas production going back four decades. Since the country’s oil boom in the 1970s, and since the discovery of vast reserves of natural gas in the 1980s and 1990s, the extractive industries have played a major role in Egypt’s political economy, and the country has been a net exporter of energy for most part since World War II. Given its experience with and the importance of the sector, you would therefore expect people to know more about it, or at least how to handle existing information.

That’s not to say that people with these skills don’t exist – there are of course very knowledgeable people in Egypt who have a great understanding of the industry. The problem is, they are few, and their informed opinions are often overwhelmed in the public sphere by all kinds of incorrect assumptions and estimates, and invented ‘facts’.

Let’s take the example of oil and gas exports. In July 2012, a time when Egypt was facing serious electricity blackouts, an Egyptian Petroleum Ministry official was cited talking about government plans to decrease exports of natural gas in order to meet growing domestic demand. While there have been similar statements made before, the topic still is of great importance considering the country’s dependence on revenues from hydrocarbons on the one hand, and its almost complete reliance on gas for its electricity production on the other. One would expect journalists and government officials to be accurate about something carrying such political weight.

 But what then followed the announcement was a serious of conflicting and contradictory news about the actual current status of exports. In October 2012, state-run newspaper al-Ahram reported that Egypt had in fact already stopped exporting gas to Jordan and Spain since March the same year – three months before the original ministry announcement. Spain and Jordan account for about a third of Egypt’s gas exports, so halting shipments to those countries is not a minor issue. The flow of gas had to be stopped several times for shorter periods before, as the Arab Gas Pipeline through which Jordan receives its gas had been sabotaged 15 times since the ousting of Mubarak. A complete stop of exports, however, results in a substantial decrease in revenues, so press reports require attention to detail.

Yet only a week later, Petroleum Minister Osama Kamal released a statement claiming that the country had only decreased and not halted the exports to Jordan, thereby contradicting what had been reported by Egypt’s main outlet. He even stressed Egypt’s general willingness to increase exports again. This line of information was then followed for some time, until it was announced last December that gas was again pumped at the normal rate to Jordan. But when there finally seemed some clarity on the status of natural gas exports to Jordan, al-Ahram again reproduced the same counter-factual news as previously, stating Egypt had halted its exports to Jordan since March, thereby adding further uncertainty to an already nebulous information environment.

It would be unfair to say that conflicting news reports are somehow an issue specific to Egypt. Publishing information around the oil and gas sector is often, if not always, highly political and even more so in a country where petroleum has been increasingly difficult to obtain and become a subject of hot, popular debate. All the data produced by companies, statements by public figures and so on are therefore likely to be subordinate to certain interests, which is true for most parts of the world.

With Egypt, however, there seems to be another issue besides interest-led news: accuracy. In a country in which social media has become such an impressive and widespread phenomenon, any kind of information is travelling at tremendous speed from person to person. Perhaps because of this, it seems like the country has also become a big rumour mill. To increase transparency in the Egyptian extractive industries, it therefore is of great importance to first increase the knowledge about how to handle information on oil and gas. While transparency in terms of publishing contracts and reporting on negotiations, amongst other issues, is still of major concern in Egypt, so is the improvement of the general information environment.

 

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