Gov’t has five new gas wells planned to come online in October, but they aren’t enough to stop the costly import cycle

Egypt is planning to add about 100 mmcf / d of gas in October from five new onshore and offshore wells at a combined cost of about USD 95 mn, according to an unnamed government official. The campaign relies on onshore and deepwater assets: Eni’s new well at the Zohr field carries the biggest share at 60 mmcf / d, while Apache is adding 20 mmcf / d from two Western Desert wells. Onshore plays from Harbour Energy (12 mmcf / d) and Cheiron Energy (8 mmcf / d) will round it out.

Barely enough to stand still: The natural decline rate across the country’s existing fields is roughly 120 mmcf / d every month. With domestic production already slipping below 4 bcf / d against a baseline domestic demand of 6.2 bcf / d (which spikes to 7.5 bcf / d during the summer heat), the country remains locked into a costly import cycle.

We need all the gas we can extract domestically because imports are proving highly volatile: In July, Egypt was the top destination for US LNG cargoes, receiving a record 21 shipments as war-driven chokepoint disruptions through the Strait of Hormuz triggered a global scramble for alternative supply, according to S&P Global Energy CERA data. The record cargo count outpaced major global buyers, including South Korea (15), Italy (14), Japan (12), and India (11).

The volume tells a different story: Egypt’s actual July imports fell to 0.63 mn tons, down from a record 1.06 mn tons in June, even as it remained one of the largest single buyers of US cargoes, Reuters reports.

A fragile defense: We learned last week that port bottlenecks and security threats can disrupt the supply chain in an instant. A drone strike knocked the newly deployed Energos Winter FSRU at Damietta out of service, forcing the country to divert an incoming LNG shipment to Jordan’s Aqaba port and draw backup gas via the Arab Gas Pipeline instead. Also, Egypt has already maxed out pipeline imports from Israel, leaving spot LNG as its main balancing tool.

BACKGROUND- The October wells are a small piece of a much bigger push already underway. The Oil Ministry is targeting 160 new oil and gas wells this FY, backed by at least USD 7.2 bn in planned investment from foreign partners, 70% of it earmarked for development wells at existing fields, and the rest for exploration. The ministry paid off more than USD 6 bn in arrears to its foreign partners in full back in June, after sweetening export rights and gas purchase prices for new production specifically to get majors drilling again.