Local gas production dipped to an eight-year low of 4.87 bn cubic feet per day (bcf/d) in 2024, shedding 16%, or nearly 1 bcf/d, y-o-y, the Middle East Economic Survey (MEES) said in a report citing Oil Ministry data. This marks the third consecutive year of declines. Meanwhile, separate figures from the Joint Organisations Data Initiative (Jodi) indicate an even lower figure of 4.77 bcf/d.

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ALSO- The country’s crude oil production hit its lowest level since the late 1970s, dropping 3% y-o-y to 476k barrels per day (bbl/d). Condensate production dropped 18% y-o-y to 71.5k b/d, another multi-decade low.

Mediterranean gas output leads the decline: The offshore Mediterranean remains Egypt’s primary gas-producing region, but its output has been declining at a faster pace than the national average. Production in the region fell 18%, or 773 mcf/d, y-o-y to a six-year low of around 3.54 bcf/d. Notably, the region's share of total national gas output dropped to 72.8%, down from over 74% in 2023.

It doesn’t look like it will get better in the short term: Egypt is in for “two tough years,” an unnamed Oil Ministry official told MEES on the sidelines of the Egypt Energy Show last week. Egypt is expected to struggle to offset its gas production declines over the next two years, with domestic output expected to remain well below past highs despite ongoing development efforts. While offshore drilling and tie-ins at key fields are aimed at slowing the decline, output is unlikely to rise before 2027. MEES sees Egypt continuing to import gas from Israel — which hit a record 1.07 bcf/d in January — and costly LNG to bridge the growing gap.

It’s not just MEES with this outlook: Local analysts expect Egypt's energy deficit to persist through FY 2024-2025 and FY 2025-2026 as lower gas production struggles to meet rising local demand, Morgan Stanley said in a research note seen by EnterpriseAM earlier this month. However, a series of policy measures could help reverse the trend, including clearing arrears owed to foreign energy companies, providing incentives for investment in explorations and new fields, and increasing the share of renewables in power generation. These efforts have fueled optimism that Egypt could return to being a net LNG exporter by 2027.

New developments in the pipeline won’t be enough: The report says that while Egypt is hoping that a handful of new gas developments could prevent further declines, the numbers suggest they won’t be enough to reverse the downward trend in production.

2027 outlook hinges on major discoveries: Egypt’s best hope for reversing the production decline lies in the Nargis and Nour fields, which are expected to come online in 2027 with a combined 500 mcf/d. Additionally, BP’s El King project, which is expected to yield 200 mcf/d, is set to launch in early 2027, and Egyptian officials are pegging long-term hopes on ExxonMobil’s Nefertari discovery, which holds 3-4 tcf of reserves.

Standing in the way: Chevron, which operates the Nargis gas field — one of the country’sbiggest recent discoveries — is pushing for better fiscal terms before submitting a development plan, according to the report. The company is reportedly seeking a gas price higher than the USD 6.20 per mn BTU that Egypt currently pays Eni for Zohr output, stalling plans to accelerate the project. “Cairo has been left frustrated by their approach and was hoping to fast-track Nargis development due to its growing gas needs. Evidently Chevron and Eni are leveraging this to try and squeeze Cairo for those improved terms,” an industry insider told MEES.

“MEES understands that the most likely scenario would see combined development of Nargis and Nour,” the report writes. Citing a local oil official as saying “considering their proximity to under-utilized Eni facilities [the now depleted Thekah field is just 40km away], and Eni’s participation in both, this presents obvious synergies.” However, before any development plans are finalized, Chevron is set to drill an appraisal well at Nargis in 2H 2025.

Remember: After becoming a net exporter of LNG in 2018 and signaling its intention to become an important energy exporter to the region and Europe, production falls and rising domestic demand led to Egypt having to ramp up imports to bridge the supply gap.

IN OTHER ENERGY NEWS-

Dragon Oil eyes further investments in Egypt as overdue payments shrink: Dragon Oil, a subsidiary of Emirates National Oil Company (Enoc), is exploring new prospects in our oil sector as the Madbouly government continues to make good on its overdue payments, CEO Ali Al Jarwan told Asharq Business (watch, runtime 5:00) on the sidelines of the Egypt Energy Show.

Dragon Oil remains committed to investing USD 500 mn in Egypt in 2025 for operational and capital expenditures while actively seeking further expansion prospects, Al Jarwan said. He added that Egypt's investment environment has become more attractive as the government continues to clear outstanding arrears.

AND- China’s North Petroleum lines up USD 100 mn for new investments in Egypt: NorthPetroleum International Company, the Egyptian arm of Chinese state-run ZhenHua Oil, has allocated USD 100 mn to secure new oil and gas concessions in Egypt and form partnerships for exploration in the Western Desert and the country’s offshore areas, the company’s Country General Manager Sun Bao told Asharq Business.

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