Egypt is currently executing an energy strategy that looks like a contradiction on paper — but importing record amounts of gas in part to build the groundwork for one day becoming a regional exporting hub, Oil Minister Karim Badawi said at an Amcham gathering attended by EnterpriseAM. While the headlines focus on the immediate goal of keeping blackouts at bay and energy supplies to industry at adequate levels, the country has also been working to prove its credibility as an export hub. The aim is to handle future flows from Cyprus and Israel for re-export as LNG, alongside a hoped-for increase in local production.

LNG imports are being used to meet domestic supply and keep the country’s export infrastructure active, albeit at its current limited levels. In contrast to energy squeezes of years passed, where domestic shortages led to the seizure of locally produced gas destined for export and a pause in arrears payments, the state is taking a different approach. “It was very important for us to ensure that we leverage those FSRUs to be able to make sure that from our production we have gas going out and to be able to fulfill our needs,” Badawi explained.

Why it matters: By allowing LNG cargoes to depart from Idku while importing from its four deployed floating regasification units with a combined 2.8 bcf/d capacity, the government is honoring existing contracts it has with international energy players in Egypt even when it comes at a financial loss. This is a long-term play to ensure that energy companies live up to their investment pledges to ramp up production. It’s about giving them confidence — not only that their arrears won’t be withheld again, but that they will still be able to tap into the more lucrative export market even when times get tough in Egypt.

Keeping exports running during the shock was “painful,” but necessary to maintain asset integrity and Egypt’s position in global markets, VP and Country Chair of Shell Egypt Dalia El Gabry said. The strategy hinges on keeping liquefaction facilities — such as Idku — active even under tight domestic supply.

“Importing and exporting — this would be the end game for Egypt, playing the role of a consolidator and managing supply to the global market,” El Gabry said, noting that “studies are put in place to look into the re-gasification option offshore.”

To increase production, the country is also looking to technologies like horizontal drilling and hydraulic fracturing. “What maybe we didn’t see before, we can see now,” Badawi said, framing technology as the lever to unlock previously inaccessible resources.

Flexible fiscal terms are also being deployed to encourage investment, with R-factor models and other arrangements allowing companies to “recover earlier on the investment” in frontier areas where infrastructure is limited, Badawi noted.

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