Egypt’s emergency oil storage faces USD 2.5 bn funding gap

Egypt has built storage for 33 mn barrels of oil but doesn’t have the USD 2.5 bn needed to fill it, President Abdel Fattah El Sisi said at Egypt Forum 2026 last week (watch, runtime: 04:05). Once full, the facilities, built under former petroleum minister Tarek El Molla, could cover six to eight months of the country’s needs, El Sisi said, describing the tanks as empty. The government hasn’t disclosed how much oil is stored or when the tanks might be filled.

The oil bill

Much of the money that could have gone into storage capacity was instead used to pay foreign producers. The government cleared USD 6.1 bn in arrears to international oil companies in June, removing a major obstacle to investment in domestic production, and has since set up a system to pay foreign oil partners nearly USD 240 mn a month. The state found some USD 7 bn for foreign partners over two years, on top of the roughly USD 3 bn a month it needs for petroleum purchases, El Sisi said at the forum. That leaves the state choosing where its FX goes first: keeping foreign partners paid so they keep producing, covering the country’s monthly fuel needs, or building reserves against a supply disruption, he added.

Keeping production going takes priority: “Prioritizing payments to foreign producers was the right decision,” says Peter Stevenson, East Med editor at Middle East Economic Survey (MEES). Keeping investment flowing into domestic oil and gas is critical to reversing declining output and limiting Egypt’s growing reliance on imports, he tells EnterpriseAM.

Then there’s the cost of filling even part of the space: Egypt is targeting a 16 mn-barrel strategic crude reserve by year-end, with 10 mn barrels from Libya and 6 mn from Iraq on top of regular monthly supplies, at a reported cost of USD 1.36 bn. That figure assumes contracted prices of around USD 85 a barrel and excludes shipping, ins, and storage. The reserve is meant to keep refineries supplied when shipments are delayed.

That’s why Stevenson favors a slower build: “Finding another USD 2.5 bn to fill storage facilities is difficult given the pressure on foreign currency. A more realistic approach would be to build inventories gradually, potentially through supplier credit, deferred payment arrangements with Gulf producers, or inventory-backed financing,” Stevenson says.

In the meantime, the empty space could earn money: Egypt had around 29 mn barrels of spare storage across its main ports as of April, with 10 facilities on the Red Sea offered for lease and talks underway with AD Ports. Leasing spare capacity would put idle tanks to work, but barrels owned by third-party customers aren’t automatically available for Egypt’s emergency needs.

Egypt’s location and growing role as an alternative oil transit route could help attract foreign customers and bring in much-needed FX, Stevenson says. Leasing revenue is unlikely to cover the full cost of strategic inventories, he adds, with any commercial agreements needing to keep enough capacity vacant for domestic emergencies.

Closing the refining gap

The six-to-eight-month figure needs explaining: Egypt’s oil demand rose to around 1.02 mn bbl / d in 2025 from 971k bbl / d in 2024, Attaqa reports, citing Opec data. At that rate, 33 mn barrels would cover about 32 days of total demand if full, by our math. “El Sisi may have been referring to specific import requirements rather than total consumption. The more useful measure would be how many days of demand Egypt can cover for individual products, particularly diesel, gasoline, and LPG, based on actual inventories rather than theoretical storage capacity,” Stevenson notes.

Refined fuel remains a weak spot: Egypt’s reliance on imported diesel and LPG is among its biggest supply vulnerabilities, Stevenson tells us. Refinery throughput has risen considerably, but domestic output still falls short of demand for key products, he says. Strategic reserves can cushion short-term shortages from regional shipping disruptions, he adds, but they can’t protect against prolonged disruptions or sustained jumps in international prices.

The infrastructure in between

Storage is only one link in a much larger network: Crude held in reserve has to reach a compatible refinery before it becomes gasoline or diesel, with those fuels then moving through depots and distribution networks. Egypt’s Petroleum Pipelines Company operates some 6.3k km of pipelines and 155 depots, while the government is also pursuing a USD 128 mn, six-pipeline expansion spanning 317 km, which it expects to complete by early 2027. These lines widen the country’s ability to move oil and fuels, but their link to the emergency depots isn’t clear.

The bottlenecks extend beyond storage: Egypt’s refining capacity and its ability to produce enough higher-value fuels remain key bottlenecks, even as refinery utilization rates improve, Stevenson says. Moving finished products from coastal storage to inland consumption centers is another potential obstacle, he adds. “Ultimately, the effectiveness of strategic reserves depends as much on the products being stored and the distribution infrastructure as on the headline storage capacity,” Stevenson says.

Al Hamra shows what a connected system could look like. The Mediterranean terminal is undergoing a USD 457 mn expansion that aims to raise crude storage capacity to 5.3 mn barrels from 2.5 mn by December. A new pipeline from the Midor refinery to Al Hamra is designed to carry refined products to the port, complementing the existing line that takes crude to the refinery. The setup links storage, refining, and transport, but its commercial storage and export role shouldn’t be confused with ensured access to emergency reserves.