The government has rolled out an emergency energy plan as a sudden halt in Israeli gas imports strained local industries, with sources telling EnterpriseAM that the government has moved to reprioritize domestic supply to safeguard electricity generation ahead of peak summer demand.

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REMEMBER- Before the resumption of natural gas supplies from Israel last week, the country halted Egypt-bound natural gas exports as the US launched strikes on Iranian nuclear sites. Israel had only just partially resumed gas exports the Thursday before, after a six-day pause in exports that began when the war started between Israel and Iran.

Reallocating gas supplies: The Oil Ministry cut off around 900 mcf/d of gas to energy-intensive industries such as steel, fertilizers, and petrochemicals to divert more fuel to power stations, sources told us. Diesel and mazut deliveries to food and cement factories were also suspended for 14 days to ensure sufficient fuel for electricity production.

The gas shortage has exposed fundamental structural weaknesses: The industry's reliance on gas imports from Israel has thrown “the fragility of the supply system” into relief, Federation of Egyptian Industries (FEI) Energy Committee head Tamer Abubakr told EnterpriseAM. These vulnerabilities include the mismanagement of reserves and investment gaps in promising fields. Delays in developing areas like the Red Sea and North Delta — which require the expertise of international players due to deepwater conditions and operational complexity — have compounded the crisis, Abubakr said. “Real geological opportunities like the Western Desert remain untapped.”

Inflated reserve estimates have made matters worse, another source told EnterpriseAM, citing the Zohr field as a case in point. Additionally, past petroleum sector investments were not accompanied by institutional reform or effective coordination, the source said.

THE IMPACT-

The fertilizer industry is resuming operations after a spell of turmoil: Abu Qir Fertilizers and Misr Fertilizers Production Company (Mopco) will gradually restart operations at their plants following the resumption of natural gas supplies, they said today in separate disclosures to the EGX (here and here, pdf). The two fertilizer manufacturers earlier this month said they were embarking on intensive maintenance plans at their factories as they paused operations in response to gas supply shortages.

ICYMI- Authorities earlier this month temporarily reduced gas supplies to several energy-intensive sectors — including iron, fertilizers, petrochemicals, and aluminum — until further notice to prioritize power generation, following the dip in Israeli natural gas imports.

Natural gas deliveries are also gradually being restored at chemical plants, said Khaled Abou El Makarem, deputy head of the Chemical Industries Chamber. “The plants didn’t fully shut down, and we’re coordinating with the government to keep fulfilling export contracts,” he said. The fertilizer and chemical sectors have hit over USD 1 bn of their USD 4 bn export target for 2025.

By the numbers: Fertilizer exports fell 6.4% y-o-y in 1Q 2025 to around USD 619.2 mn, according to data from state statistics agency Capmas.

Steel factories operating using direct reduction technology were particularly affected, seeing as they account for approximately 80% of the industry's gas consumption, El Marakby Steel CEO Hassan El Marakby told us.

Cement plants, on the other hand, were largely unaffected due to their reliance on coal, with surplus output in the steel and ceramics sectors also helping cushion the immediate impact, said Walid Gamal El Din, head of the Export Council for Building Materials.

On track to meet our building material export goals: Export targets for building materials stand at USD 12 bn for the year, split into USD 10 bn for metals and USD 2 bn for building materials, Gamal El Din said. He expressed continued optimism about achieving these targets while acknowledging caution due to energy supply fluctuations.

Brick factories also got off lightly: Clay brick factories avoided the crisis despite the fact that approximately two thirds of them rely on natural gas, with the remainder using diesel, Federation of Egyptian Industries’ refractories and bricks division head Ali Singer said. A small number of factories had begun testing alternative solutions, such as biogas produced from animal manure or sewage treatment.

THE ROAD AHEAD-

LNG imports could help narrow the supply gap: The government is exploring two plans to secure LNG shipments as part of an import strategy aimed at averting a bigger crisis, Abou El Makarem said. The first would see the government importing gas shipments directly from neighboring countries, and the second would enable the private sector to import gas for its own use and pump it through the national grid in exchange for a usage fee — an option still under consideration.

An export-funded gas import scheme is on the table: The FEI’s Energy Committee has submitted a proposal to the government to establish a fund financed by export revenues to help cover the cost of gas imports for industry, Abubakr said. Under the proposal, 20% of export proceeds could be earmarked to support stable gas supplies and maintain the competitiveness of Egyptian industry.

Your top industrial development stories for the week:

• Some 35 Chinese foundries operating in Egypt plan to compete for the upcoming iron production licenses, Al Borsa reports, citing unnamed sources. The Industrial Development Authority is currently finalizing the details of the tender — including the number of licenses, production capacity, and investment cost per license.
• The Arab Organization for Industrialization and China’s Xingaoyi Medical Equipment will develop a USD 100 mn medical equipment factory, which will X-ray machines, MRI scanners, CT scanners, and ultrasound devices for the first time in Egypt.
• Bosch subsidiary BSH Home Appliances has inaugurated its first factory in Egyptand Africa with investments of EUR 55 mn, which will manufacture home cooking stoves for both domestic and export markets.