Eni to export EastMed gas through Egyptian facilities: Italian energy giant Eni will leverage Egypt’s position as a regional energy hub to export gas produced in Eni’s fields throughout the whole Eastern Mediterranean through Egyptian facilities, this came during discussions between company representatives and Oil Minister Karim Badawi.

More love from Eni: The company also agreed to ramp up its exploration and development activities locally and increase the number of operational rigs in its concessions in Egypt.

Remember: Earlier this month, it was revealed that the oil giant has plans to drill two new wells in the Zohr field in 2H 2025 with investments of USD 160 mn. This coincided with news that the government had cleared USD 1.3 bn worth of arrears to foreign oil and gas companies operating in the country at the end of June.

IN CONTEXT-

This comes as Egypt faces domestic energy challenges: Egypt has been struggling with electricity shortages, partly due to declining domestic natural gas production since 4Q 2021, according to Capital Economics. This decline, coupled with rising electricity consumption and higher average temperatures, has forced Egypt to increase gas imports, shifting the country from a net energy exporter to an importer.

Importing more gas has strained the current account: Egypt’s current account deficit widened by 225% y-o-y to USD 17.1 bn in the first nine months of FY 2023-24. Capital Economics partially blamed an increased energy imports for the widening deficit. The situation has been exacerbated by less secure gas imports, with the large share coming from Israel disrupted by its war on Gaza.

Long-term solutions are needed: While increased exploration and production could provide short-term relief, Egypt is also looking to accelerate its shift to renewable energy sources. Prime Minister Moustafa Madbouly recently pointed to plans to accelerate this transition to reduce energy security vulnerabilities. Currently, renewables make up just 11% of Egypt’s energy sources, according to Capital Economics.

The renewables challenge: The government aims to raise the share of renewables in its energy mix to 42% by 2035 — a goal that carries an extremely high price tag. World Bank estimates indicate that it would cost Egypt USD 52 bn (13% of annual GDP) to meet this goal, as well as an additional USD 60 bn to continue at this pace until 2050. Aiming for zero emissions by 2050 would require additional investments of USD 96 bn, making for a total price tag of USD 209 bn.

The way forward: More foreign investment and international assistance will be needed to chip away at this funding gap. Egypt stands to be able to access USD 1.2 bn in green financing from the IMF Resilience and Sustainability Facility should we successfully pass the third review of our current IMF program. Green bonds have a role to play in financing the green transition as well, with officials suggesting in 2023 that issuances could reach USD 3-5 bn by 2028.

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