As Cairo observes the third anniversary since the collapse of the long standing government of Hosni Mubarak, continued unrest and political instability are producing real consequences for energy firms willing to stay put, forcing some to look for an exit.
Notably, the UK’s BG Group announced that they would be forced to break production contracts with customers and lenders and would enforce force majeure in Egypt due to a reduction in output in the company’s largest area of activity. The reduction, about 15 percent over the last year for the UK’s second largest producer behind BP BP +0.3%, was the result of Cairo’s demand that gas output be shifted to meet domestic demand rather than allowing exports.
Even before the dissolving of the Mubarak government, Cairo struggled to meet surging domestic need for the region’s most populous country. In the three years since, they have faced additional pressure from a reduction in funds available to meet import needs, unsustainable energy subsidies, decreased domestic production and finally a weighty debt to international oil and gas providers that sits around $6 billion.