The petrochemical industry plays a vital role in the economic development and growth of the Egyptian economy, in addition to allowing the country to exploit the full capacity of its oil and natural gas resources. In light of this, there has been a strong governmental push to form an apt development
strategy to accelerate the development of the industry. The plan consists of two branches working simultaneously to expand the industry. The first of these branches aims to support and develop existing projects to increase their competitive capacities, while the second path consists of establishing new petrochemical projects in the near future to highlight the country’s investment opportunities.

This development plan lays out a strategy which aims to balance the country’s trade deficit by improving exports and reducing dependence on imports, particularly for the consumption of plastics. The governmental strategy includes major legislative and institutional reforms designed to benefit both national and international players, and increase foreign direct investment. International industry experts and national industrial strategists alike believe that the country is set to become one of the region’s leading players, and investors have already began responding positively to the evolving business environment.

Currently, the petrochemical sector accounts for around 12% of Egypt’s total industrial production, which is estimated at US $ 7 billion. While this amount is equivalent to only 3 % of Egypt’s total GDP, the National Petrochemical Plan (2002-2022) aims at increasing this number. This will in turn position the country as a primary competitor in an industry which has traditionally been led by the countries in North Africa where natural gas readily is available.

The organizational structure of the petroleum sector consists of: Egyptian General Petroleum Corporation, Egyptian Natural Gas Holding Company, Egyptian Petrochemical Holding Company, South Valley Holding Company and Egyptian General Authority for Mineral Resources as seen above.


Strong Governmental Support: The Ministry of Petroleum developed its strategy in order to provide for the raw material needs of the country, encourage investment, create jobs, and to activate integration policies between oil companies.

A wide variety of products: Plastics, fertilizers and acrylics are already being produced in the country. The government is also allowing foreign firms to invest in the phosphate fertilizer sector.

Significant Regional Demand: Strong regional demand is expected to require larger volumes of olefins (ethylene, propylene), polyolefin’s (PE, PP) or downstream products. As the economies develop and quality of life improves, polyethylene usage is expected to increase.

Competitive Production Costs: As natural gas prices continue to rise, the production of petrochemicals is migrating towards countries with lower natural gas costs such as Egypt.

Natural Resources: In addition to abundant natural gas reserves, Egypt has several raw material reserves which are needed for the manufacture of any number of petrochemical products. These locally available raw materials reduce the costs of manufacturing.

Feeder and Support Industries: Egypt has numerous feeder industries to support the petrochemicals sector. The presence of locally based feeder and support industries facilitates doing business and reduces outsourcing costs.

Proximity to Customers: Egypt is close to the major petrochemical consumers in Europe, Africa and the Middle East. Strong regional markets and proximity to major export markets decreases the time it takes to get products to customers.

Areas of Investment

1 | Plastics

Egypt is one of the only countries in the MENA region which has a wellestablished plastics market, exporting worldwide to the EU, Middle East, and African countries. In terms of manufacturing, the plastics industry appears to be the most modernized and rapidly developing sub sector, which is largely due to the high quality machinery and equipment utilized in the factories.

The country’s scope of production includes raw materials, home appliances, plastic bags, packages, pipes, fiberglass products, bottles, automotive accessories, to name a few, making the Egyptian plastics market strategically important for global companies to invest in, export to or import from.

Egypt’s plastics market is comprised of approximately 65% imports and 35% domestic sources, with the main suppliers being Korea, India, Russia, and the Gulf States. Polyethylene, polyvinyl chloride suspension, PET, and thermoset plastics are the most common locally manufactured products.
A private company now produces polypropylene, but most propylene continues to be imported. The high quality of EU-made products explains their popularity in Egypt.

Despite the local production of the above mentioned raw material, the market is not yet saturated. As the government of Egypt is focusing on exporting to collect foreign currency, 75% of production is set aside for exports, with the remainder being used locally. It is predicted that approximately 3$ billion will be invested into the following subsectors over the coming years:

– Styrene     – Aromatic complex     – SB Latex
– Polyester   – Ethoxglates              – 2nd Olefins complex
– PTA – Methanol II

2 | Fertilizers

The role of fertilizers has become more prominent since the establishment of the high dam and the increase of constructional expansions, both of which have lessened the fertility of cultivated land. Egypt has abundant reserves of gas and rock phosphate which are the basic raw materials for a strong nitrogenous and phosphate fertilizer industry. This is teamed with the avid experience which Egyptians have with both types of fertilizers to form a market which is prosperous and easy to penetrate.
Nitrogen fertilizers represent the most widely used type of fertilizers in Egypt, with a strong governmental contribution in the industry. Similarly, there have been numerous phosphate fertilizer production units erected within the country since trading in this petrochemical began in the 1940’s. The production of ammonia-urea fertilizers has increased significantly within Egypt over last seven years. Currently, the private sector is representing the largest producer of fertilizers with 96.2% and 62.4% shares of nitrogen and phosphate fertilizers production respectively, whilst the public sector only accounts for 37.6% of total production.

To encourage further investment in this field the government has included fertilizer production in the list of activities which may be carried out in a free zone. Such free zone companies can take advantage of the many incentives available to them, such as their exemptions from exporting
restrictions. Furthermore, the Egyptian Ministry of Environment also provides different funding packages for projects to help large and medium industrial facilities to control the pollution they cause. This is done by the Egyptian environmental affairs agency who offers the fund in cooperation
with international institutions such as the World Bank, European Investment Bank, Bank of Japan for international Cooperation, French Agency for Development and Reconstruction Bank of Germany through the industrial Pollution controlling Program.

Ongoing Projects 

1 | Tahrir for Petrochemicals

Located in the Southern region of Ain Sukhna stands a colossal petrochemical project, home to ”Tahrir for Petrochemicals”. This factory facilitates production of 1.4 million tons of ethylene and polyethylene per year, as well as 900 thousand tons per year of propylene, 250 thousand tons per year of butadiene, 350 thousand tons per year of gasoline and 100,000 tons per year of hexane, at a total cost of approximately 3.7 billion dollars.

2 | Naftas Project

New investments worth $233 million have been injected into the Nafthas petroleum refining project to produce high-octane gasoline in Alexandria. The project will add 850,000 tons annually of reformats to produce highoctane gasoline, in addition to large amounts of butane gas and hydrogen
obtained through the new Nafthas project. The project began in July of this year

3 | Petroleum Corporation and the Toyota Tsusho Corporation Refining
and Petrochemical Complex

Set to launch in 2021, this project will be located in the Suez Canal Economic Zone with investments exceeding $ 3 billion. A detailed feasibility study was completed at the end of the first quarter of 2018 and production will begin in 2021 with the aim of producing around 5.3 million tons per year of petroleum products, in addition to, approximately one million tons of petrochemical products. The Japanese company will cooperate with the Ministry of Petroleum to complete the project according to specific timetables.

4 | The Murgham Industries Complex

This complex reopened after 12 years with the aim of transporting foundries and plastic workshops outside residential areas and establishing a specialized area for the production of plastic.

The project includes 240 factories with licenses worth EGP 75 million.

Factories are allocated through the usufruct system for 30 years, the banking partner will finance the machines, whilst the Ministry will provide technical, engineering and marketing support to applicants for units and factories in the complex. The Ministry has also agreed to conduct studies on market needs, raw materials and their availability, in addition to providing up to EGP 5 million in loans from the National Bank to unit holders.