Undersea gas fires Egypt’s regional energy dreams

Gas platform in the Mediterranean. (File/Reuters)
Updated 18 November 2018
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Undersea gas fires Egypt’s regional energy dreams

  • In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast
  • Gas production has now hit 184 million cubic meters a day

CAIRO: Egypt is looking to use its vast, newly tapped undersea gas reserves to establish itself as a key energy exporter and revive its flagging economy.
Encouraged by the discovery of huge natural gas fields in the Mediterranean, Cairo has in recent months signed gas deals with neighboring Israel as well as Cyprus and Greece.
Former oil minister Osama Kamal said Egypt has a “plan to become a regional energy hub.”
In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast, including the vast Zohr field, inaugurated with great ceremony by President Abdel Fattah El-Sisi.
Discovered in 2015 by Italian energy giant Eni, Zohr is the biggest gas field so far found in Egyptian waters.
The immediate upshot has been that since September, the Arab world’s most populous country has been able to halt imports of liquified natural gas, which last year cost it some $220 million (190 million euros) per month.
Coming after a financial crisis that pushed Cairo in 2016 to take a $12 billion loan from the International Monetary Fund, the gas has been a lifeline.
Egypt’s budget deficit, which hit 10.9 percent of GDP in the financial year 2016-17, has since fallen to 9.8 percent.
Gas production has now hit 184 million cubic meters a day.
Having met its own needs, Cairo is looking to kickstart exports and extend its regional influence.
It has signed deals to import gas from neighboring countries for liquefaction at installations on its Mediterranean coast, ready for re-export to Europe.
In September, Egypt signed a deal with Cyprus to build a pipeline to pump Cypriot gas hundreds of kilometers to Egypt for processing before being exported to Europe.
That came amid tensions between Egypt and Turkey — which has supported the Muslim Brotherhood, seen by Cairo as a terrorist organization, and has troops in breakaway northern Cyprus.
In February, Egypt, the only Arab state apart from Jordan to have a peace deal with Israel, inked an agreement to import gas from the Jewish state’s Tamar and Leviathan reservoirs.
A US-Israeli consortium leading the development of Israel’s offshore gas reserves in September announced it would buy part of a disused pipeline connecting the Israeli coastal city of Ashkelon with the northern Sinai peninsula.
That would bypass a land pipeline across the Sinai that was repeatedly targeted by jihadists in 2011 and 2012.
The $15-billion deal will see some 64 billion cubic meters of gas pumped in from the Israeli fields over 10 years.
Independent news website Mada Masr reported that Egypt’s General Intelligence Service is the majority shareholder in East Gas, which will earn the largest part of the profits from the import of Israeli gas and its resale to the Egyptian state.
Kamal said he sees “no problem” in that, adding that the agency has held a majority stake in the firm since 2003.
“That guarantees the protection of Egyptian interests,” he said.
Ezzat Abdel Aziz, former president of the Egyptian Atomic Energy Agency, said the projects were “of vital importance for Egypt” and would have direct returns for the Egyptian economy.
They “confirm the strategic importance of Egypt and allow it to take advantage of its location between producing countries in the east and consuming countries of the West,” he said.
The Egyptian state is also hoping to rake in billions of dollars in revenues from petro-chemicals.
Its regional energy ambitions are “not limited to the natural gas sector, but also involve major projects in the petroleum and petrochemical sectors,” said former oil minister Kamal.
Minister of Petroleum and Mineral Resources Tarek El Molla recently announced a deal to expand the Midor refinery in the Egyptian capital to boost its output by some 60 percent.
On top of that, the new Mostorod refinery in northern Cairo is set to produce 4.4 million tons of petroleum products a year after it comes online by next May, according to Ahmed Heikal, president of Egyptian investment firm Citadel Capital.
That alone will save the state $2 billion a year on petrochemical imports, which last year cost it some $5.2 billion.
Egypt is also investing in a processing plant on the Red Sea that could produce some four million tons of petro-products a year — as well as creating 3,000 jobs in a country where unemployment is rife.


South Korea-Japan trade feud engulfs tech giant Samsung

Updated 19 July 2019
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South Korea-Japan trade feud engulfs tech giant Samsung

  • Company begins testing non-Japanese material for semiconductors as dispute deepens

SEOUL: Samsung has started testing non-Japanese materials used in producing state-of-the-art semiconductors amid a deepening trade dispute between Seoul and Tokyo.

According to company sources, the South Korean chipmaker has begun testing hydrogen fluoride etching gas from China, Taiwan and some local suppliers.

The etching gas — one of three materials that Japan has decided to restrict shipping to South Korea — is crucial for producing semiconductors since it is used in removing excess material around circuit patterns on silicon wafers.

“We’re testing hydrogen fluoride etching gas from companies outside Japan, such as Taiwan and China, in an effort to diversify supply sources,” a Samsung official told Arab News, asking not to be identified. “We’re also searching for local suppliers of the chemical.”

Testing from new suppliers, however, is to expect to take at least six months, and it remains to be seen if the quality of non-Japanese etching gas will be high enough to be used in the production of semiconductor, the official said, refusing to elaborate new supply sources.

SK Hynix and LG Display have also started testing of non-Japanese high-purity hydrogen fluoride to minimize the impact of Japan’s trade embargo, according to the company officials.

Binhua Group of China is known to be one of the Korean firms’ new suppliers for the etching gas. According to Shanghai Securities News, the chemical company based in Shandong has signed an agreement with South Korean chipmakers to supply etching gas.  

The gas needs to be 99.999 percent pure for it to be used in chipmaking. Companies in Japan maintain top technology levels in the field, taking up to 90 percent of the global market.

HIGHLIGHT

Samsung is the world’s largest chipmaker.

On July 1, Japan announced it would curb shipments to South Korea of three materials used for chip and display production — fluorinated polyimide, photoresists and hydrogen fluoride. The move is widely seen as punitive action for a recent court ruling here that orders two Japanese firms to compensate wartime forced laborers. 

With the Moon Jae-in administration rejecting Tokyo’s demand for third-party arbitration, Japan is expected to take the dispute to the International Court of Justice.

Japanese companies can still export high-tech materials to South Korea, but they are required to get a license from the government. The license could take 90 days to come through even if they are approved.

Samsung Electronics and SK Hynix, the world’s two biggest memory chipmakers, have been hit hardest by the tougher export controls by the Japanese government, as both semiconductor manufacturers rely on Japanese supplies for the materials.

According to the Korea International Trade Association, South Korea imported about 92 percent of photoresists and 43.9 percent of hydrogen fluoride from Japan.

Analysts believe the Japanese trade restrictions will compromise Samsung’s next-generation semi-conductor businesses, such as those based on 7-nanometer chip fabrication. The 7-nano chips are made with technology involving extreme ultraviolet lithography, which requires the use of photoresists.

“Samsung was scheduled to mass-produce 7-nano-chips from the latter half of this year with the supply of photoresists from Japan’s supplier, JSR,” said Lee Mi-hye, a researcher at the Export-Import Bank of Korea.

“JSR-made photoresists are produced in Belgium, so it’s not subject to the restrictions for now. But the foreign branches of Japanese firms would be vulnerable to regulations in the near future.”