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| Headache for the government |
As summer approaches, the government's interest in securing the largest possible amount of gas to avoid a recurrence of load shedding is growing , with pledges to avoid a recurrence of load shedding. This is being done through several avenues, including concluding long-term import contracts and offering incentives to foreign partners.
Engineer Karim Badawi, Minister of Petroleum and Mineral Resources, accompanied by leaders of the Ministry and the Egyptian Natural Gas Holding Company (EGAS), witnessed today the arrival of a new ship to receive imported liquefied natural gas and convert it to a gaseous state in preparation for pumping it into the national natural gas grid (regasification ship). The southern berth at the Tahya Misr terminal in Alexandria seaport received the ship (Energos Power), owned by the American company New Fortress, coming from Germany.
The ship is also heading to Damietta Port today, Monday, to be prepared for actual operation. It will then head to Ain Sokhna Port, where it will be put into operation with the aim of pumping approximately 600 million cubic feet of gas per day into the national energy grid.
But let's return to Egypt's daily natural gas needs to understand the extent of the deficit and the government's ability to fill it during the summer. Egypt's daily natural gas needs amount to approximately 6.2 billion cubic feet per day, while daily production ranges between 4.1 and 4.2 billion cubic feet. The government aims to increase natural gas production by the end of this year to approximately 5 billion cubic feet per day, especially with daily needs increasing to approximately 7 billion cubic feet per day during the summer months.
According to data from Bloomberg, Egypt's liquefied natural gas exports have gradually declined since peaking at 7.7 million tons annually in 2022, while it imported about 2.5 million tons last year.
The data revealed that Egypt has shifted from being an exporter of liquefied natural gas to an importer, driven by increasing demand resulting from rapid population growth and rising temperatures, along with declining production from local fields, particularly the Zohr field. Average production from the field currently stands at approximately 1.5 billion cubic feet per day, significantly lower than the peak reached in 2019, estimated at approximately 3.2 billion cubic feet per day.
Government moves to resolve the crisis
Regarding the government's efforts to resolve the gas crisis, at least during the summer months, the government is still in talks with liquefied natural gas (LNG) suppliers to sign contracts extending through 2030, in an effort to meet the growing demand for electricity during the summer.
The government is negotiating contracts spanning the years 2028 to 2030, which also aim to reduce Cairo's reliance on the volatile spot market. The contracts include flexible clauses that allow for reassessment of required quantities over the coming years, while any additional shipments will be secured through separate purchase tenders.
Among the deals the government is negotiating is a long-term gas import agreement with Qatar, signed during a visit by Egyptian Petroleum Minister Karim Badawi to Doha on May 12. He did not provide details on the number of shipments or their timeframe.
Egypt routinely imports Qatari liquefied natural gas (LNG) as part of its global purchases, but this is the first time the two sides have publicly discussed signing long-term contracts.
The government is also intensifying its efforts to boost gas production, offering a number of incentives to encourage foreign partners to increase production. These incentives include allowing the export of a certain share of new production, setting a timetable for repaying foreign companies' dues, and increasing the purchase price of new gas.
