Egypt hikes gas purchase price for foreign partners: The Madbouly government has agreed with Italian energy player Eni to raise the purchase price of new natural gas from onshore areas by 60%, a government official told Asharq Business. The hike will apply to output from sites managed by Agiba — a JV between Eni subsidiary IEOC and the Egyptian General Petroleum Corporation (EGPC).

How much are we talking? The purchase price will more than double to USD 4.25 per mn British thermal units (BTU), up from USD 2.65 per mn BTU, the official said.

Egypt is looking to incentivize foreign players to boost production by increasing the purchase price for their share of natural gas in a bid to meet the local market demand. Eni currently produces some 110 mn cubic feet per day (mcf/d) of gas in Egypt — with the move set to increase the value of its share of natural gas output in the country even further, the official added.

REMEMBER- We have big energy plans for the year, with unconfirmed reports last year saying that the government is looking to see domestic production rise by 30% to 6 bn cubic feet per day by the end of 2025.

Not the first we’ve seen: Egypt agreed to increase the purchase price of newly extracted gas from US-based Apache in March.

Behind the push: Most mid-to-smaller-size firms have significantly downscaled operations due to lack of cashflow receivables — even accepting payments to be made in EGP — which in recent times has been “very scarce,” an industry source told Mees.

The solution: “The [oil] minister is offering them improved contractual terms, in the hope that better future cash-flows convince them to stay and invest, but they cannot go [spending in excess of revenue] beyond a certain limit,” the source noted.

Eni has a lot in the pipeline: Eni is reportedly in talks with a Baker Hughes-led consortium to deploy USD 300-400 mn to boost output from its Zohr concession through the drilling of two new wells. The energy player is set to launch development work on a new onshore site in 2Q 2025, after the price of the gas produced is bumped up, the official added. The Italian player also plans to begin producing 100 mn cf/d of gas from its Noor field off Egypt’s northern coast by mid-2026.

Background: Eni earmarked EUR 8 bn in investments for the country’s energy sector over the next four years as part of a wider EUR 24 bn plan across North Africa, CEO Claudio Descalzi said last month. “Internal demand in these countries — because of demographic growth — is increasing at about 7-8% every year, this means they need gas … they need investment,” he said.

Tags: