Oil and gas exports decline on lower prices, production in 4M 2023

Egypt’s oil and gas exports fell more than 50% y-o-y in the first four months of 2023, according to Capmas data out on Thursday. Revenues from natural gas, crude and petroleum products exports totaled USD 3.17 bn in the January-April period, down from around USD 6.6 bn during the same period last year, the figures show.

Lower receipts from LNG exports were the biggest contributor to the dip: Natural gas revenues halved to USD 2.1 bn during the four-month period, according to the figures. Receipts from crude and petroleum product exports were also significantly down y-o-y, falling 54% and 57% respectively.

What’s going on? It’s a mixture of prices and production. Natural gas prices have plunged since spiking last year on the back of the war in Ukraine, hitting gas revenues in Egypt, which sells LNG on the spot market rather than under long-term arrangements. Local production has also declined in recent months and has only partly been compensated by rising imports from Israel, a veteran insider told us.

It wasn’t just the oil sector: Hard currency revenues from non-oil exports also fell even as a series of currency devaluations made Egyptian goods and services more competitive internationally. Revenues fell 14% to USD 11.4 bn during the January-April period, with finished and semi-finished goods both declining in USD terms.

Remember: The value of the EGP has halved against the USD since March 2022 after the central bank devalued the currency three times in response to the FX crisis triggered by the war in Ukraine.

But the trade deficit still narrowed due to falling imports: The country’s trade deficit narrowed to USD 10.6 bn from USD 14.5 bn as the FX crunch hampered the ability of importers to bring goods into the country. Non-oil imports fell 30% y-o-y to USD 21.2 bn in the four-month period, offsetting the impact of lower export revenues on the country’s balance of trade.

NO LNG EXPORTED IN JUNE -EL MOLLA

The LNG slowdown continued in June: Egypt didn’t export any LNG in June, according to Oil Minister Tarek El Molla, who is quoted as telling Reuters last week that production was being earmarked to satisfy peak summer demand. Trade sources reportedly told the newswire that they thought the pause was due to falling domestic production.

Remember: Local gas consumption peaks between June and September because of air conditioning in the hot summer months.

Back in July? Egypt will resume LNG exports in July, El Molla told the newswire.