Q & A: BP gas deal with Egypt a giveaway?

Report reveals Egypt missed out on billions of dollars in profit in its deal with the British energy giant.

British Petroleum
Analysts say Egypt is likely to suffer another summer with power cuts [YouTube screen grab]

An investigation by the online publication Middle East Eye has revealed that the British energy giant BP secured an agrement with the Egyptian government that gives the company 100 percent of profits, after paying royalties and taxes. 

Analysts said the terms of the agreement, which was negotiated for 20 years, reflect an Egypt “desperate” for gas and a sector run “incompetently” for years. 

Al Jazeera spoke to the article’s author Dania Akkad to learn more about her report. 

In your investigation, you reveal some of the terms for Egypt in the latest agreement between Egypt and BP. At a high level, this report suggest this is the result of gross negligence?

Analysts I spoke to were divided. One said Egypt had little choice. Its indebtedness and immediate need for gas meant that it was in no position to bargain.

Others said it was at best gross mismanagement, and at worst the result of corruption. Certainly, top officials allowed the country to become deeply indebted to multinationals, without securing enough gas for Egyptians.

If Egypt is so severely in debt, and we know it has poor energy-related infrastructure and BP is making a $12-bn investment, could it not be the case that these are the best possible terms of a deal for the Egyptians?

It’s not so much that this latest deal, by itself, is shocking given the country’s current situation. But what’s critical is that it comes at the end of 20 years of bartering that has seen Egypt get increasingly less profit for the two concessions involved.

The type of agreement that’s now being used is one in which countries don’t typically receive profits, only taxes, royalties and, potentially, a bonus.

But the question one of my key sources raised was, ‘What could Egyptians have had if the sector had been run competently?’ He and other insiders who have analysed the past contracts believe the country has missed out on $32-bn in profits and a stable supply of gas at a time when blackouts are common.

How do you think Egyptians will react? What are you hearing since you published the story?

If our reports reach Egyptians, I would imagine they would react with a combination of anger and weary resignation, but little surprise.

In the coming months, all citizens of whatever political background will likely suffer through another summer with powercuts.

They are paying the price and their lives will be impacted by these deals over which they have little, if any, control. I have had several emails from Egyptians who were not surprised by our report, but were eager for more details about the agreement.

We didn¹t hear from the Egyptian government on this story. Did they respond?

We gave them every opportunity. I sent a list of nine questions to the CEO of EGPC (Egyptian General Petroleum Corporatation) last week. I received confirmation from his assistant that my questions were received, but we have not received any answers to date. We would be eager to see them.

Source: Al Jazeera