Egypt has halted all LNG exports beginning in May as lower domestic natural gas production has forced the North African country to divert supply to local power demand during the summer months.
Last year was Egypt’s hottest summer on record, with temperatures surpassing 95 F. This summer is forecast to have similar temperatures. Egypt’s Ministry of Electricity and Renewable Energy has already resorted to daily power cuts since mid-April in some regions of the country to reduce gas consumption.
Egypt’s energy minister Tarek El-Molla noted in February that Egypt had stopped liquified natural gas exports last summer, and warned it may again this summer.
State-owned Egyptian Natural Gas Holding Co. (EGAS) reportedly bought two cargoes of the super-chilled fuel last month, and is expected to import three LNG cargoes each month from July to October to meet the high power demand needed to fuel air conditioning during the hot summer months.
“I understand EGAS is targeting 15-20 cargoes to import this year, and our base case is that they will require at least 16,” Qamar Energy CEO Robin Mills told NGI.
Egypt would need 105 million cubic meters/day (MMcm/d) of natural gas as demand is estimated to reach 135 MMcm/d this summer, based on estimates from the electricity ministry.
Egypt exported 7.14 million tons (Mt) of LNG in 2022, but exports fell to 3.4 Mt last year, with no LNG exports in June, August and September, according to Kpler. Exports did not resume again until last fall.
EGAS in 2024 has exported eight cargoes or 530,000 tons through the first four months compared to 2.39 Mt exported over the same time last year, according to Kpler. Consultancy Qamar Energy expects EGAS may have at most one more cargo to ship before summer, but other shipments this year are unlikely.
Last year, Egypt's total natural gas production fell to its lowest since 2017, falling to around 59.29 billion cubic meters (Bcm), based on the Joint Organisations Data Initiative. Production from the Zohr field last year was 2.3 Bcf/d, down from 2.7 Bcf/d in 2019 because of an output decline from discovered wells. Egypt started a new drilling program last year with a target to drill 35 new wells in two years in the Mediterranean Sea and Nile Delta.
Egypt imported LNG from 2015-2018, but after a boost in local natural gas production from the huge Zohr field, Egypt began exporting in 2018 and reexporting Israeli gas as LNG.
Egypt has an agreement with Jordan to use their Energos Eskimo floating storage and regasification unit (FSRU) to import LNG at the Jordanian Aqaba port on the Red Sea.
As a long-term solution, EGAS has reportedly chartered its own FSRU for 18 months beginning in June, which would be moored at Egypt’s Ain Sokhna port on the western coast of the Red Sea's Gulf of Suez.
Egypt also relies on Israeli gas imports to meet local demand, with the Zohr field said to contribute around 35% of Egypt’s total gas production. Israel delivers gas via pipeline to Egypt from its offshore Leviathan and Tamar fields. Exports from Leviathan to Egypt jumped to 6.3 Bcm last year, up from 4.9 Bcm exported in 2022.
Poten & Partners Inc.’s Jason Feer, global head of business intelligence, said Egypt needs a permanent solution such as Israeli or Cypriot gas since Egypt does not have enough feed gas, but there is “plenty of LNG for Europe, as long as nothing goes wrong,” he added.
