Egypt Plans Massive LNG Import Deal to Avert Power Crisis

Watan-Egypt is preparing to finalize one of the largest liquefied natural gas (LNG) import deals in its history, planning to contract with up to six international energy companies for the supply of over 160 shipments through June 2026, according to a report from Bloomberg citing sources familiar with the negotiations. The contracts may also be extended for an additional two years.

These long-term agreements are intended to preempt a repeat of electricity outages or reliance on the spot market, where gas prices recently surged to over $15 per MMBtu during peak periods—compared to the $8–$10 range in long-term contracts. However, this move could increase pressure on Egypt’s national budget, especially amid a weakened pound and rising import bills.

According to the Bloomberg report dated June 5, the preliminary list of companies includes:

• Saudi Aramco

• Trafigura (Singapore)

• Vitol (Netherlands)

• Hartree Partners LP (USA)

• BGN (Switzerland)
  Other unnamed suppliers are also involved. Several companies declined to comment due to the Eid holiday and the unavailability of Egypt’s Ministry of Petroleum officials.

The Egyptian Natural Gas Holding Company (EGAS) reportedly received 14 offers for gas supply contracts ranging from 18 months to 3 years, reflecting strong international interest in Egypt’s gas market, particularly given high global prices and Egypt’s growing domestic shortfall.

Egypt’s Gas Production Crisis

Until 2022, Egypt was among the few regional LNG export hubs, largely due to the giant Zohr gas field. However, starting from Q3 2023, domestic production declined to an average of 4.4 billion cubic feet per day (bcf/d), while local demand exceeded 6.2 bcf/d, creating a daily gap of 1.8 bcf, according to Egypt’s Ministry of Petroleum and Energy Intelligence.

This supply shortfall prompted Cairo to reduce LNG exports, particularly from the Idku plant, which saw a 35% drop in shipment volume in 2023 versus 2022, according to data from ship-tracking platform Kpler.

Concurrently, electricity consumption doubled due to extreme summer heatwaves and increased use of air conditioning, pushing both residential and industrial gas demand higher.

Infrastructure and Floating Regasification Units

To address this growing demand, Egypt has recently deployed the “Energos Eskimo” floating regasification unit, with a daily capacity of 750 million cubic feet, joining the “Energos Power” unit, which replaced the “Hoegh Gallant” in Ain Sokhna with a similar capacity. A third FSRU, owned by Turkey’s BOTAŞ, is expected to be operational by late 2025 or early 2026.

Once all three units are online, Egypt’s total regasification capacity will exceed 2.25 bcf/d, offering much-needed flexibility to meet peak summer demand and easing pressure on the national electricity grid.

Future Prospects and Re-export Potential

Analysts from Wood Mackenzie and Rystad Energy predict that Egypt could return to net LNG exporter status by 2027, contingent upon key developments such as:

• Increased investment in exploration and production

• Progress in the East Mediterranean economic zone

• Expansion of Red Sea concessions, which have begun to attract major international energy firms.

Significant untapped gas discoveries remain undeveloped due to financing and infrastructure constraints, meaning a return to surplus depends on reinvigorating investment in the sector. Egypt’s current gas demand is 6.2 bcf/d, while domestic output remains at 4.4 bcf/d.