Politics are set to play an even more important role in North African gas development after the uprisings

This article is part of the section "Political events in the Middle East and their impact on energy" in Issue 84 of Oxford Energy Foru

Issues in the pricing of domestic and internationally-traded gas in MENA and sub-Saharan Africa

The countries of the Middle East and Africa sit on large reserves of natural gas, but their share of international trade looks unlikely to increase significantly by 2020. Fast-growing domestic demand is, in many of these countries, putting considerable pressure on domestic gas supply, resulting in reduced exports and growing import needs. Artificially-low domestic gas prices are a key feature of this state of play. They need to be reformed if these regions – especially the Middle East and North Africa – are to contribute to international gas trade more as a source of exports than as a growing demand (and import) centre. However, reforms of gas (and energy) prices remain tentative because of the political economy logic in which they tend to be rooted and in which governments appear to be locked. This is not to say that solutions do not exist – remedies can be devised based on existing experiments and country-specific circumstances. This paper analyses the political economy of domestic pricing in gas-rich developing countries in the Middle East and Africa, and chronicles the pricing mechanisms in the main export and import contracts in these regions, helping assess the disconnect between domestic prices and international prices and its implications for gas use in these regions

The Social Contract in the MENA Region and the Energy Sector Reforms

During the last few years and because of the low oil prices in particular, the increasing awareness of the unsustainability of subsidized systems led several MENA countries to take steps to lower subsidies, which have been part of the social contract for decades, especially as far as the energy sector is concerned. Nowadays, the need for reforms is compelling for more than one reason. Namely, the subsidized system distorts market trends, fosters inefficient use of resources, depresses foreign direct investment and fuels overconsumption, which is no longer sustainable, particularly as far as the population growth in most of the MENA countries is concerned. In this paper both the resource-abundant countries and the energy importing nations will be analyzed, in order to investigate similarities and differences between the two and to carry out an initial assessment of the reforms in two representative countries, namely Saudi Arabia, exporting country par excellence, and Egypt, which imports energy