Egypt has shelved plans to phase out its floating storage and regasification units (FRSUs) in the near term, opting instead to keep the vessels as a strategic backup until at least 2030, three government sources told EnterpriseAM.

The market had assumed the FSRUs were leaving. Israeli Prime Minister Benjamin Netanyahu gave the green light to a USD 35 bn gas export agreement between Israeli and Egyptian companies last week, setting up the expectation was that pipeline gas would replace expensive chartered vessels importing LNG.

Instead, the government is adopting a dual-sourcing strategy — maximizing pipeline imports while keeping FSRUs to handle peak demand, cover infrastructure delays, and maintain export optionality.

Why it matters

This signals a fundamental shift in how the government manages energy security — moving from crisis management (think, scrambling for cargoes) to strategic redundancy. By keeping the infrastructure, the government is paying a premium to ensure it is never held hostage to a pipeline outage, a sudden heatwave — or Israel turning off the export tap again.

The move is also driven by the physical reality of the infrastructure gap. Construction on the new gas transmission pipeline to channel larger quantities from Israel won’t begin until the first quarter of next year and isn’t expected to finish until early 2028, making the existing FSRUs the primary fail-safe for the national grid until that link is fully operational.

Even with the vessels staying in place, our external energy bill is set to decline as the volume of LNG imports drops. The government plans to slash LNG imports by roughly 30% next year, targeting between 120 and 125 cargoes. Negotiators are also using the improved supply outlook to squeeze suppliers on price, with the Oil Ministry currently negotiating to lower the import premium to between USD 0.75 and USD 1.00 per MMBtu over the Dutch TTF benchmark — a significant reduction from the crisis-level premiums seen recently.

The retention of the FSRUs is also consistent with our ambition to become a regional natural gas hub. Cairo and Amman are coordinating to jointly use the regasification infrastructure, creating a shared pool of assets that lowers the cost burden for both nations, our sources told us. Looking further ahead to the 2028-2030 window, the government aims to pivot the infrastructure from import defense to export offense, utilizing the FSRUs to direct surplus output from liquefaction plants to Europe once new pipeline flows from Israel’s offshore Leviathan field stabilize.

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