Egypt’s plans to become a regional natural gas export hub are on hold as dwindling domestic production and extreme heat increase its dependance on Israeli pipeline and LNG cargoes to meet surging power demand.
Rolling power cuts in Cairo have occurred since April as the government moves to conserve fuel while searing summer temperatures bake the capital. In some regions of the country, temperatures exceeded 116 degrees, the highest on record in 18 years according to the Egyptian Meteorological Authority.
Egypt last imported liquefied natural gas in 2018, before rising Israeli production helped feed the country’s plans to increase utilization at its terminals and become a net gas exporter. However, after Egypt helped supply much needed cargoes to Europe in 2022, exports were halted during last summer.
Some shipments resumed in October, but 2023 volumes were almost 50% lower than the year-prior at 3.38 million metric tons (mmt), according to data from Kpler.
Egypt exported its last LNG cargo this year in April. So far, 530,000 metric tons of LNG has shipped from two of the country’s three export terminals.
State-owned Egyptian National Gas Holding Co. (EGAS) bought four spot cargoes at a premium for April and May delivery to Jordan’s import facility, according to local reports. EGAS recently completed a tender to buy 17 cargoes between July and September, according to Kpler data.
The cargoes could be delivered to a chartered floating storage and regasification terminal EGAS secured from June to February 2026, to be moored at Egypt’s Ain Sokhna port on the western coast of the Red Sea.
Egypt needs Israeli pipeline supply, as well as LNG imports to meet its domestic demand, even with output from its two LNG plants suspended, according to a report by Oxford Institute of Energy senior visiting fellow Julian Bowden. In 2023, pipeline imports from Israel covered 14% of Egyptian demand.
“With Egypt seeking LNG imports for summer 2024, there is no shortage of demand for Israeli gas,” Bowden said.
Israel delivers gas via pipeline to Egypt from its offshore Leviathan and Tamar fields. Exports were halted from the Tamar field last October due to the war in Gaza, but Israeli pipeline exports have since exceeded 1.0 Bcf/d in the first quarter of 2024, according to Israeli government data.
Pipeline exports from the country are expected to increase to 2.5 Bcf/d by 2027, supported by a 2023 deal by Chevron Corp. and its partners in the Tamar field to increase export volumes by an additional 3.5-4 Bcm to Egypt in an 11-year deal starting next July. The contract would triple expected export volumes from Israel to Egypt.
NewMed Energy LP, a partnership helping to develop Israel’s Leviathan gas field said Wednesday it would invest up to $500 million to expand export capacity after receiving government approval.
Israel authorized another 118 Bcm of exports, in addition to the 105 Bcm previously approved. Israel mostly exports gas to Egypt and Jordan and has signaled it wants to boost revenue.
Last year, the Israeli government also approved a plan to expand the pipeline network to Egypt by building a 40-mile pipeline to enable Egypt to receive an additional 6 Bcm/year of gas by 2027, according to Israeli newspaper Globes.
“The gas relationship between Egypt and Israel has become mutually important: Egypt needs Israeli gas to meet its domestic demand, while Israel needs the Egyptian market as its own gas surplus has no alternative market,” Bowden explained.
