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* Egypt asks main industries to do maintenance in summer
* New pricing scheme to cut fuel smuggling opportunities
* Egypt to cut gas exports, Qatari swap deal to start in afew weeks
* Iraqi crude oil deal stalled, little other options
By Julia Payne
LONDON, May 28 (Reuters) - Egypt will cut exports of naturalgas and tell major industries to slow output this summer toavoid an energy crisis and stave off political unrest, thechairman of the Egyptian General Petroleum Company (EGPC) toldReuters.
Tarek El-Barkatawy said Egypt was counting on top liquidnatural gas (LNG) exporter Qatar to obtain additional gasvolumes in summer, while encouraging factories to plan theirannual maintenance for those months of peak demand. Cairo willalso need to source more oil to meet seasonal driving demand.
A restructuring of its huge subsidy programme will reducesmuggling by thieves who now siphon off a fifth of subsidisedfuel to sell at profit, El-Barkatawy said. Under the new scheme,subsidies would be applied only at the retail stage, leavingfewer opportunities for theft in wholesale and shipping.
The new chairman of the main state oil company took the topjob last week after incumbent Sherif Hadara became oil minister.Previously, El-Barkatawy was under-secretary at the oil ministryand has worked for foreign oil companies.
He arrives at a strained time in Egypt as the country hasbeen struggling to buy fuel since the revolution that toppledPresident Hosni Mubarak in 2011. Egypt's economy has flounderedwith political uncertainty and the loss of tourism, culminatingin a currency crisis.
Cairo now relies on large loans from friendly countries,notably Qatar, which allow it to buy diesel and gasoline on theopen market. For crude oil, it has turned to Libya andKuwait but the volume is still not enough to runits refineries at full capacity and meet summer demand.
"We know that demand is more than supply. We are relying onimports," the chairman said.
Hopes of Iraqi oil arriving in time for summer aredwindling. Back in March, Iraq's oil ministry said it waswilling to supply 4 million barrels per month.
"It is static. It has not been agreed yet, I cannot say whenit will be," El-Barkatawy said.
At the heart of the fuel problem is the subsidies, whichaccount for around one fifth of Egypt's GDP and could reach 120billion Egyptian pounds ($17.4 billion) for the year ending inJune as Egypt's fuel needs are forever rising.
Egypt produces its own energy but became a net oil importerin 2008 and is rapidly becoming a net importer of naturalgas. The government pays for Egyptian drivers to buy fuel for aslittle as 15 U.S. cents for a litre of diesel.
Cairo's new leaders worry that cuts to subsidies would riskpolitical and social unrest, but without cuts the InternationalMonetary Fund will not agree to a $4.8 billion loan seen asnecessary to keep the public finances afloat.
In addition, Egypt owes at least $5 billion to foreign oilproducers, of which half is in arrears.
GAS EXPORTS TO DROP FURTHER
Long petrol queues and some protests have become the normsince 2011 and major cities have lately been hit by occasionalblack outs. To survive the summer, Egypt plans to reduce naturalgas exports, with Qatar filling its customers' needs through an LNG swap deal.
The first such swap is due to occur in a few weeks,El-Barkatawy said. That will allow Egyptian gas to be divertedto feed Egypt's own power plants, but even that will not beenough and Egypt will need to supplement it by burning fuel oil.
"We will convert some burners to run on fuel oil... Eitherfrom our system or through imports," he said.
Egyptian gas exports have fallen steadily in recent years.Pipeline flows to Israel and to Jordan, Lebanon and Syriastopped last year while in LNG only the Idku export plantoperated by BG Group is still working, and at reducedcapacity. Exports from another LNG plant at Damietta stopped atthe start of the year.
Longer term, El-Barkatawy said the country aims to boostproduction of oil to 1 million barrels per day and natural gasto 7.5 billion cubic feet per day in the next 3-5 years, both ofwhich represent increases of about 35 percent.
Egypt will achieve these levels as existing concessions comeonline and through new technologies, unconventional resourcesand exploration in the Red Sea and the south, he said.
BP's offshore finds in the Mediterranean should add 1billion cubic feet per day of gas, with some eight otherconcessions due to come online to reduce depletion.
SQUEEZING OUT THE SMUGGLER
El-Barkatawy does not see a significant decrease in subsidycosts immediately as more ground work must be done, notablyremoving the smuggler from the equation.
To target the middle men, Egypt plans to change the point atwhich the oil becomes priced at the subsidy level. At themoment, subsidies apply to the whole supply chain, which makesit possible to steal artificially cheap fuel in big quantitiesthrough large distribution networks and sell it at a profit athigher prices in Egypt or abroad.
EGPC hopes to deter smugglers by keeping the price at thehigh international level until the actual point of sale.Distributors will no longer have access to subsidised fuel.
"Once we deliver the diesel, the financial load willtransfer to the gas station," El-Barkatawy said.
A new "smart card" system to track purchases of subsidisedfuel, due to start next month, will also make it easier to fighttheft.
"We will introduce the smart card soon and even apply it tothe assembly points and gas stations and make sure that anydiesel or gasoline unloaded from ships is accounted for when itgoes onto trucks to the distributors and gas stations."
Data accumulated from smart cards will eventually help thegovernment reduce the subsidy bill without spurring protests andhurting industry, he said.
"So by doing this, it will improve our credit level and willbe one step in the right direction to secure the IMF loan." (Reporting By Julia Payne; Editing by Peter Graff)
