Economy

Winners And Losers From Massive Gas Discovery Off Egypt

Italian energy giant ENI has reported an unprecedented discovery of gas reserves off the coast of Egypt. It's no quick fix for the troubled Egyptian economy.

Record gas discovery in Egypt for Eni
Record gas discovery in Egypt for Eni
Isabel Esterman

CAIRO â€" The Italian energy company Eni labeled the find off the Egyptian coast, a “supergiant” gas field, said to be the largest such discovery ever made in the Mediterranean.

The field, estimated to hold 30 trillion cubic feet of gas, could help satisfy Egypt’s energy demand for decades, the firm said when it made the announcement earlier this week.

The discovery was hailed as much-needed good news for a country in the grips of an energy shortage. Once a natural gas exporter, Egypt’s production has failed to keep up with demand, leading to widespread blackouts and, eventually, the importation of natural gas this April.

A discovery of this magnitude is a boon, but experts caution not to expect that the gas will be a quick fix for the country's energy problems, or its economic woes.

Gas fields that were hyped up in the past have often proved disappointing. Even this very exploration block, which was once part of Egypt’s massive North East Mediterranean Deepwater concession, led to disappointment in 2001 when a Shell test well failed to yield gas, recalls David Butter, an energy analyst and associate fellow at the Chatham House think tank.

This time, though, gas has actually been found and the prospects look much better, adds Butter. “I’d be pretty confident that the reserve estimates are credible,” he said.

Since 2001, other major gas fields have been discovered nearby, adding credibility to Eni’s claims. “It’s not far from the Israeli discoveries, particularly Leviathan,” Butter explains. “Evidently there is a lot of gas in that area.”

Slow drip

But even if Eni’s reserve estimate proves accurate, that doesn’t mean the gas will reach the grid overnight. The petroleum minister has promised that the gas will be fast tracked, and Eni CEO Claudio Descalzi told Italian newspaper La Republicca on Monday that he expects licensing terms to be agreed upon within the month, pipelines and the first wells to be in place next year, and for the project to bear “fruit” by 2018.

But Butter and energy researcher Mika Minio-Paluello estimate it will likely be closer to five years before gas is ready.

One issue to be resolved is how the gas will be divided between Egypt and Eni. Under Egypt’s production sharing system, foreign companies like Eni operate in a joint venture with Egyptian state companies. After production costs are covered, the gas is split. The government gets a share â€" essentially for free â€" while the gas company has the right to sell its share back to the government or, in some cases, for export.Early reports suggest that Egypt may end up with more than half of the gas from the Shorouk field. EGAS Chariman Badie told the privately owned Daily News Egypt that the country will retain at least a 60% stake in the field.

Butter argues that Egypt will still save money compared to importing liquefied natural gas (LNG), and that higher prices are simply the cost Egypt has to pay to motivate companies to invest in exploration and production.

“The reason why Egypt is now running a huge deficit and has to invest in import capacity of 1.25 billion cubic feet of LNG per day is because of a failure to get the model right, in terms of getting its own gas produced and online,” Butter says.

Shut out

While the regular blackouts that plagued Egypt in past summers have eased for residential consumers, industry is still hard hit. A recent report from Capital Economics noted that manufacturing activity in June 2015 was 30% below the same month last year, in large part due to natural gas shortages.

Although it will likely take years before the Eni discovery brings more gas to Egypt, Butter predicts that the results of the find will be overwhelmingly positive for the economy.

“Industry has been complaining for a long time about gas shortages, so that’s going to be a big help. I don’t think there is any real downside,” he says.

The losers in the deal are Israel and Cyprus, both of whom had hoped to sell their natural gas to Egypt. Another potential victim is Egypt’s fledgling renewable energy industry. “It’s highly likely the find will take investment money and investment energy away from renewables,” Minio-Paluello says. “If you were thinking of building a large-scale solar plant in Egypt, you’d be rethinking at the moment.”

Minio-Paluello also doubts that ordinary Egyptians will feel the benefits of the large natural gas find.

“I think it’s good news for a lot of the Egyptian elite. To what extent it’s good news for Egyptians on the street, I’m much less sure,” he says. “A lot of natural resource revenue flows get captured along the way, and there’s a lot of scope for corruption. Egypt’s past with gas deals has clearly been quite checkered.”

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Society

The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation

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Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.


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