The energy-intensive industrial sectors are striving to adopt more flexible operational strategies that rely on redistributing production over time and rationalizing consumption. Additionally, they are utilizing alternative technologies to lessen dependence on natural gas. These measures align with the government's initiative to reorder gas usage priorities, especially amid rising supply pressures and import costs.
In this context, Hossam El-Salab, head of the ceramics division at the Building Materials Chamber, confirmed that the sector has begun restructuring production plans to align with energy consumption patterns. Companies have increased production rates during the winter season, taking advantage of the decreased demand for gas for heating purposes, which alleviated pressure on the grid and enabled factories to operate more efficiently.
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El-Salab added that this strategy helps companies build a production stock sufficient to cover summer periods, which may experience gas supply pressures or increased costs. He explained that several companies have also started investing in modern technologies aimed at reducing gas consumption within production processes, such as improving the efficiency of furnaces and production lines, contributing to cost reduction and long-term sustainability.
Moreover, Khaled Abou El-Makarem, head of the Export Council for Chemical Industries and Fertilizers, pointed out that the state's move towards rationalizing natural gas usage in energy-intensive sectors necessitates a reconsideration of pricing mechanisms to achieve a balance between supply provision and ensuring production continuity. He clarified that heavy industries, particularly chemicals and fertilizers, primarily rely on gas as a key component in the production process, making any changes in supply quantities or pricing directly impact production costs and competitiveness in local and export markets.
Background & Context
Sherif El-Gabaly, chairman of the Poly Serve Group for fertilizers and chemicals, noted that fertilizer companies view gas as a critical factor in determining production volume. Companies maximized operational rates during last winter to minimize dependence on gas during peak consumption periods in summer. He explained that the demand for fertilizers tends to decline relatively during summer, especially in European markets, allowing companies to readjust production and export plans in line with seasonal changes.
In this context, Tarek Zaghloul, vice president of the Export Council for Chemical Industries and Fertilizers, confirmed that industrial companies, especially in the fertilizer sector, have adopted a seasonal production pattern, increasing production during winter by up to 30% in preparation for summer, which sees a decline in demand both locally and for exports.
Impact & Consequences
Zaghloul also added that the period of reduced demand is utilized for executing regular maintenance programs for factories, ensuring operational efficiency and minimizing breakdowns. He explained that the relationship between gas supplies and production volume is direct; if a company receives 80% of its gas needs, it operates at nearly that same percentage of its production capacity.
He noted that gas prices remain high compared to some competing markets, posing a challenge for companies. However, there are efforts from the government to mitigate the impact through supply mechanisms and regulation. Additionally, recent discoveries announced by the Ministry of Petroleum could support local gas production, potentially reducing reliance on imports and lowering energy bills, which are among the main factors driving up costs.
Regional Significance
These changes in production strategies within industrial sectors are of great importance, reflecting the challenges faced by Arab countries in securing energy supplies. The reliance of industries on natural gas as a primary energy source makes them vulnerable to price and supply fluctuations, necessitating consideration of sustainable alternatives.
In conclusion, it is evident that shifts in operational strategies may be key to addressing future challenges and achieving sustainability amid changing economic conditions.