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Egyptian Riots could Effect Oil, Gas, and Telecommunications Industries

The youth in Egypt are rising up against President Hosni Mubarak’s authoritarian government, rioting in the streets, yearning for the freedoms and opportunities they see byway of social media like facebook, twitter and youtube.
 Egyptian Riots could Effect Oil, Gas, and Telecommunica..
 
 
The youth in Egypt are rising up against President Hosni Mubarak’s authoritarian government, rioting in the streets, yearning for the freedoms and opportunities they see byway of social media like facebook, twitter and youtube. In an attempt to quell this outside stimulation and put down the riots, the Egyptian government has forced their ISPs to shut off their networks, and the Internet and even mobile phones are inaccessible to the people of Egypt.

This is going to have a dramatic negative effect on Egypt’s economy, as so much of the world’s businesses rely on Internet and mobile communications to operate. What’s more is that the region may be putting the world’s energy security at risk.

Egypt controls the Suez Canal, and upward of 35,000 ships pass through its waters every year. Approximately 2,700 of those ships are crude oil tankers. Egypt also maintains control of two crucial oil pipelines—the Suez Canal and Sumed Pipelines—which export oil from the Persian Gulf. The fees collected from these pipelines make up a significant portion of the Egyptian government’s revenue. It is estimated that over 3 million barrels of oil pass through these pipelines every day, and the country has the largest oil refinery sector on the African Continent, processing 975,000 barrels of crude oil per day.

In the last decade, Egyptian natural gas has been discovered and exploited. In 2009, 646 billion cubic feet of natural gas was exported—30 percent via pipeline and 70 percent as liquid natural gas.

The scary thing about the government’s willingness to shut down an entire sector, as they did with their telecommunication networks, is that this could just as easily happen with their oil and gas sectors. Egypt produces enough of these resources to sustain its own energy needs without having to rely on outside inputs, and in a time of crisis such as this, who knows what the government’s next move will be. To take things one step further, if the rioters do get their way and oust the current president and his regime, then questions remain as to how the next regime will allocate the country’s oil and gas resources.

Source: U.S. Energy Information Administration
 
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