Egypt eyes 17 LNG shipments over the next three months in its biggest tender in years

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What We're Tracking Today

The nation is still waiting for a new cabinet to take the reins

Welcome back, friends. After a well-deserved week off, most of us will be back at our desks today and may be in need of a little refresher on some of the big stories that have been developing over the last few weeks.

Here are some big business stories that were in the headlines before we all went on break:

The nation is still waiting for a new cabinet to be sworn in, after Prime Minister Moustafa Madbouly was given a mandate to form a new government at the start of the month.
Inflation fell to its lowest level in over a year on the back of considerably slower food price increases, as traders continued to price in a lower exchange rate following the float of the EGP.
The EGX launched its long-awaited shariah-compliant index, dubbed the EGX33.
Egypt has been gearing up for the resumption of LNG imports, with a floating regasification unit that should have by now docked in Ain Sokhna and several LNG shipments in the pipeline.

WATCH THIS SPACE-

The new gov’t still under wraps: MP and TV presenter Moustafa Bakry said that the new ministerial lineup “could be delayed for several days” during his show on Sada El Balad on Thursday (watch, runtime: 4:35). “The reason for the delay is that there is still no decision on the names of most new cabinet ministers,” Bakry explained, adding that “in light of public opinion, there is a need for an overwhelming change of cabinet ministers and this will take some time.”

PSA-

WEATHER- Temperatures are creeping back up in Cairo today, with a high of 39°C and a low of 27°C, according to our favorite weather app.

It’s a little cooler over in Alexandria, with a high of 33°C and a low of 24°C.

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DATA POINT-

The Suez Canal Economic Zone signed USD 10.8 bn worth of green hydrogen and ammonia projects in 2023, the second largest value in Africa after Mauritania, according to the UN’s 2024 World Investment Report (pdf).

RED SEA WATCH-

EU naval force chief calls for doubling of Red Sea deployment: The European Union’ fleet deployed in the Red Sea to fend off the Houthis’ attack on vessels passing through the waterway needs to be doubled, Operation Aspides head Vasileios Gyparis said, Bloomberg reports. “We don’t have that many assets and the whole area we have to cover is enormous,” Gryparis said, urging EU member states to “provide more assets.”

THE BIG STORY ABROAD-

You can practically hear the bears salivating: The S&P 500 has now gone 377 days straight without a 2% sell-off as investors buy up big tech stocks, fueled by an AI boom that saw Nvidia overtake Apple and Microsoft as the world’s most valuable company last week. CNBC warns that “it’s unclear how long this low-volatility period will last” — it’s the longest stretch of its kind since the global financial crisis of 2007, leaving bears wondering what the catalyst for a selloff could look like.

Speaking of AI: Pundits are starting to ask whether the world’s electricity grids can handle the explosion of demand from both businesses and consumers. Forget, for a moment, whether AI is a feature, a core technology, or marketable product and toss aside the environmental impact of AI: Our collective hunger to play with ChatGPT, Bard, and the theft engine that is Perplexity has massive implications for power grids that are already being tested by the hottest summer on record.

Governments may need to selectively hike prices for power-hungry data centers and may have to reconsider climate targets. Consider Ireland, where data centers are on track to account for a third of the country’s energy use by 2026.

Go deeper with Bloomberg’s immersive and very well-reported AI is already wreaking havoc on global power systems.

IN OUR CORNER OF THE WORLD- Israel has killed at least 42 in a strike in Gaza and the IDF is also coming under intense criticism for strapping a wounded Palestinian to the front of an army jeep during a raid in the West Bank. With ceasefire talks at a standstill, the WSJ argues that America is running out of options to push through an end to the eight month-long conflict.

IT’S A HUGE WEEK IN THE US OF A: The international press on both sides of the Atlantic are gearing up for the first debate of the 2024 election cycle between Joe Biden and Donald Trump on Thursday that could influence what’s looking to be a very tight election.

EGAS eyes securing at least 17 LNG shipments over the next three months

State gas firm EGAS is seeking at least 17 LNG shipments in a tender, to be delivered over the next three months — its largest in years — Bloomberg reports, citing traders it says have knowledge of the matter.

The details: In the tender, which closes on 26 June, EGAS is looking to acquire seven shipments of LNG cargoes in July, six more in August, and four more in September, Reuters reports, citing unnamed trade sources.

But potential bidders look hesitant: Egypt is also seeking deferred payments of up to six months for the shipments, which could “narrow the list of bidders and increase premiums” amid high demand for the fuel in Asia, the trade sources said. Although Egypt has made a point of paying back its arrears to foreign oil companies after it floated the EGP in March, some traders told the newswire that they are concerned given the nation’s “credit risk and difficult economic situation.”

And we may have to pay a premium: We could be looking at a USD 1-2 premium per mmBtu on the Dutch TTF hub gas price — one of the main benchmarks for European gas prices — to secure all shipments, Reuters cited its sources as telling it. On top of this, “any longer-term payment terms would warrant an additional premium,” one source told the newswire.

There’s heavy competition for imports from the Atlantic: Demand from Asia, particularly from Japan, is especially high for Atlantic LNG volumes — which are expected to be the main source of Egypt’s supply of the fuel while the Bab Al Mandab strait remains inactive.

Remember: A fall in domestic production has pushed the country from being a net exporter to a net importer of LNG in recent months. The government has been ramping up imports in efforts to address a supply gap that has translated into extended power cuts and most recently had the government slashing gas supplies to fertilizer companies to cut supplies to feed power plants instead.

Carlyle to launch Mediterranean energy company with USD 945 mn acquisition of Energean’s Egyptian, Croatian, and Italian assets

Energean to offload Egyptian assets: LSE-listed oil and gas company Energean has agreed to sell its assets in Egypt, Italy, and Croatia to the global investment firm Carlyle for up to USD 945 mn, according to a statement (pdf) from Energean. After the sale is finalized by the end of 2024, Carlyle will use the acquisition to form a new Mediterranean-focused oil and gas company that will be chaired by former BP CEO Tony Hayward.

By the numbers: Energean will receive more than three times the USD 284 mn that it paid to buy the assets from Edison in 2020.

The Egyptian assets on the table: Energean’s Egyptian producing assets include a 100% stake in stake in the Abu Qir concession — one of Egypt’s largest, according to a separate statemen t from Carlyle. The company also has complete ownership of its under-development North East Almreya and North Idku concessions, along with a 50% stake in the exploratory East Biur El Nus concession and 30% share in the exploratory North East Hap’y concession, according to the company’s website, which also appear to be part of the transaction.

Advisors: Rothschild & Co is Energean’s financial advisor and White & Case is acting as its legal counsel.

The story got the attention of the global business press: Reuters | FT | WSJ.

Egypt inks eight USAID grants totalling USD 130 mn

USAID puts its money where its mouth is: International Cooperation Minister Rania Al Mashat has signed agreements with US Ambassador to Egypt Herro Mustafa Garg for eight USAID grants worth USD 130 mn to further the state’s developmental objectives, according to a statement from the ministry.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

The rundown:

A USD 35 mn grant for the US-Egypt Higher Education Initiative;
A USD 26.9 mn grant for trade and investment promotion;
A USD 15 mn grant to improve health conditions;
A USD 14.5 mn grant to support agribusinesses and rural development;
A USD 13.5 mn grant for the Inclusive Economic Governance agreement;
A USD 12 mn grant for the second phase of the basic education program;
A USD 7.5 mn grant for the Integrated Water Solutions Support program
A USD 5.5 mn grant to combat climate change

What they said: “We reaffirm the long-term commitment of the US government to creating economic opportunities and improving conditions for all Egyptians. With funding of $130 million from the United States, we are bolstering Egyptian efforts to achieve a healthier and more prosperous life and future for the coming generations,” said US Ambassador to Egypt Herro Mustafa Garg.

Data point: USAID has channeled over USD 30 bn towards Egypt since 1978.

Government to prosecute Hajj tourism companies after hundreds die in heatwave

It was an evening of sadness and anger on the airwaves last night as the nation’s talking heads zeroed in on the tragic deaths of Hajj pilgrims in Mecca last week. The cabinet’s newly formed task force to support the families of the deceased and facilitate the repatriation of those that were lost has so far confirmed 31 deaths from a total of 50,752 registered Egyptian pilgrims, but AFP cited an unnamed Arab diplomat putting the number at 658 — 630 of which were unregistered pilgrims.

Adib demands accountability: Shortly after Prime Minister Moustafa Madbouly ordered that 16 unnamed tourism companies have their licenses stripped and their managers be prosecuted, Amr Adib took the airwaves to tell his viewers that “What happened to the Egyptian pilgrims this Hajj season must not be overlooked or lost in investigations. We need to identify the responsible companies and see their owners held accountable for the deaths of at least 500 to 600 Egyptian pilgrims” (watch, runtime: 37:25). “There are numerous loopholes in the Hajj system,” Adib added.

The government was eager to signal that its taking action: The government’s task force “has initially identified 16 travel companies that facilitated the unregistered travel of pilgrims outside official Hajj frameworks and didn’t provide them with any services,” cabinet spokesperson Mohamed El Homsani called in to tell Ahmed Moussa on Ala Mas’ouleety (watch, runtime: 15:00). El Homsani added that “the prime minister has ordered the immediate revocation of these companies' licenses, referral of their officials to the public prosecution, and imposition of fines for the benefit of the victims' families.”

The charge: The government’s task force claims that the majority of those that died entered the country via personal visit visas obtained for them by companies organizing Hajj trips — instead of the required Hajj visas. The reason that so many unregistered pilgrims died was that they were not provided with medical services or accommodation from the travel agencies and had to access Mecca on foot via desert roads during the heatwave to avoid being caught by Saudi authorities, the task force said.

ALSO ON THE AIRWAVES- War brewing on Lebanon’s border with Israel? The escalating tensions between Hezbollah and Israel on the Lebanese border also caught Adib’s attention. “There are rumors that we are on the brink of war in Lebanon. Many countries, including Canada and Kuwait, have advised their citizens to leave Lebanon immediately” said Adib (watch, runtime: 11:21). “Hezbollah is determined to keep the front with Israel ablaze as long as the war in Gaza continues,” military strategist and commentator Samir Ragheb told Adib in a phone call. He added that “the US is opposed to Israel starting a war. The US aircraft carrier Gerald R. Ford is en route to the region to intervene in case of a sudden war, especially since there is talk that Israel’s air defense could collapse in the face of Hezbollah’s rockets.”

Turkish USD 700 mn denim factory gets gov’t greenlight. PLUS: Ades inks drilling contract, Forbes International Tower to cost USD 1 bn, Sahl eyes digital banking license, Alwady Green heads to KSA

MANUFACTURING-

Government gives the greenlight to Turkish USD 700 mn denim factory in Port Said: Turkish ready-made garment maker Şirikcioglu has obtained approval from Egypt’s government to establish a denim factory in Port Said with an estimated investment cost of USD 700 mn, according to a statement from the Trade Ministry. The factory will be built on an area of 100k sqm and will provide around 5k jobs during its first phase, the statement read.

ENERGY-

Regional drilling giant Ades inks jack-up drilling contract with the Egyptian government: Saudi Arabia-based and born-in-Egypt driller Ades Holding has signed a two-year SAR 185 mn contract — currently equivalent to USD 49.3 mn — with the Suez Oil Company to deploy a jack-up rig in the Suez Canal, a subsidiary of the state’s Egyptian General Petroleum Corporation (EGPC), the company said in a disclosure to the Saudi Exchange. Operations are expected to kick off in 2H 2024.

The contract is for longer than first thought: The final contract, which was signed on Thursday, 13 June extended the operation period from the 21 months initially agreed on in May — which had the contract valued at SAR 161 mn — to two years.

ICYMI: Ades announced in March that it had signed a ten-year service agreement with two subsidiaries of the EGPC to boost oil production at two brownfields in Egypt alongside an unnamed “leading local exploration and production player,” the company said at the time.

INVESTMENT-

B Investments eyes big ticket healthcare investments in 2024: Private Equity firm B Investments is looking to invest EGP 1.5-2 bn throughout the year with a focus on the healthcare and pharma sectors, Chairman Hazem Barakat told Al Borsa. Barakat added that two investments in these sectors are set to be concluded soon in addition to another investment currently being studied.

We’re gonna see more B “investments” in the longer term: Barakat also revealed that B Investments eyes doubling their operations every three years, adding that the company’s current operations size amounts to some EGP 20 bn.

REAL ESTATE-

The new capital’s Forbes International Tower is expected to cost USD 1 bn, according to a statement from the cabinet. The tower will be built by Magnom Properties, a subsidiary of Saudi Arabia’s Rawabi Holding, who signed an MoU with the business magazine last year on the sidelines of the World Economic Forum in Davos to build the tower.

TAX-

FinMin wants to give businesses more time to settle tax disputes: The Finance Ministry has filed a proposal to the cabinet to renew a taxation law allowing companies with annual revenues below EGP 10 mn to settle tax disputes until the end of January 2025 as the ministry looks to improve the investor climate and boost tax revenues, a cabinet statement read. Some 17k disputes, amounting to over EGP 15.5 bn, have been settled in the ten months between between August 2023 and May 2024, the statement added.

BANKING-

Sahl digital bank in the pipeline? Cairo-based fintech startup Sahl is mulling over filing for a digital bank license from the Central Bank of Egypt, CEO Abdullah Assal told Asharq Business (watch, runtime: 1:40).

Remember: The race to become Egypt’s first digital bank is on, with Banque Misr’s Misr Digital Innovation being the first to receive preliminary approval from the Central Bank of Egypt in May to launch one.

EXPORT-

Alwady Green goes to KSA: Local agribusiness firm Alwady Green has almost wrapped up construction works on its first branch in Saudi Arabia, with investments exceeding EUR 5 mn, Al Borsa reports, citing company chairman Amr Ashour. The new branch — the second in the Gulf market following the branch in UAE — is slated to open in under two months to promote homegrown mangoes in the kingdom and surrounding Gulf countries, according to Ashour.

EM currencies on course for worst 1H since 2020

Currencies in emerging markets have been on a losing streak since the beginning of 2024, falling towards their worst start to the year since 2020, pressured by a stronger-than-expected USD and carry traders fleeing Latin American markets, writes the Financial Times.

By the numbers: JPMorgan’s index for currencies in emerging markets has dipped 4.4% in 2024 — a dip more than double the size of their decline over the past three years.

Carry trade investors have been stepping back from some of the larger emerging markets: Despite investor appetite growing in the beginning of the year for the carry trade in emerging markets, local interest rate uncertainty and elections spooking the markets have destroyed much of the gains made. This is particularly true in Latin America, where the MXN has fallen nearly 10% against the greenback after Mexico’s election of Claudia Sheinbaum spooked the markets and other currencies in the region followed suit.

Thankfully, the carry trade is alive and well in some smaller emerging markets — including Egypt: Some carry trade investors have been ditching larger emerging markets and are instead focusing on local currency bonds from smaller countries working their way out of economic difficulties with high interest rates like Egypt and Nigeria, the salmon-colored paper writes.

But don’t forget about the big USD elephant in the room: With the DXY index showing the USD up 4.4% since the start of the year against six of its main trading partner’s currencies in addition to traders cutting expectations of six or seven interest rate cuts this year to just two, EM currencies have become much less attractive. “A bit more than half of EM weakness has been about USD strength,” explained Abrdn’s EM portfolio manager Kieran Curtis.

EGX30	26,418	+1.1% (YTD: +6.1%)
USD (CBE)	Buy 47.64	Sell 47.78
USD (CIB)	Buy 47.66	Sell 47.76
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	11,499	-1.3% (YTD: -3.9%)
ADX	9,013	+0.7% (YTD: -5.9%)
DFM	4,012	+0.6% (YTD: -1.2%)
S&P 500	5,465	-0.2% (YTD: +14.6%)
FTSE 100	8,238	-0.4% (YTD: +6.5%)
Euro Stoxx 50	4,907	-0.8% (YTD: +8.5%)
Brent crude	USD 85.24	-0.6%
Natural gas (Nymex)	USD 2.71	-1.3%
Gold	USD 2,331.20	-1.6%
BTC	USD 64,284.70	+0.1% (YTD: +52.0%)

THE CLOSING BELL-

The EGX30 rose 1.1% on the last close before the Eid break on turnover of EGP 2.9 bn (36.2% below the 90-day average). Local investors were net buyers. The index is up 6.1% YTD.

In the green: Abu Qir Fertilizers (+7.7%), Ezz Steel (+4.8%), and Madinet Masr (+4.5%).

In the red: Eastern Company (-5.3%), Egypt Kuwait Holding (-1.0%), and Palm Hills Development (-0.7%).

CALENDAR

2024

JUNE

29-30 June (Saturday-Sunday): EU-Egypt Investment Conference.

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

2-3 July (Tuesday-Wednesday): Aswan Forum for Sustainable Peace and Development, Cairo, Egypt.

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

10-11 July (Wednesday-Thursday): The Japan-Arab Economic Forum, Tokyo.

16-17 July (Tuesday-Wednesday): The Egypt Mining Forum, Cairo, Egypt.

18 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 July (Tuesday): Revolution Day (national holiday).

AUGUST

4-5 August (Monday-Tuesday): Egypt Expat Forum.

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15 September (Sunday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

25-26 September (Wednesday-Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-17 October (Sunday-Thursday): Cairo Water Week, Water and Climate: Building Resilient Communities, Cairo, Egypt.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

NOVEMBER

4-8 November (Monday-Friday): World Urban Forum, Cairo, Egypt.

21 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

26-28 November (Tuesday-Thursday): Egypt Energy Show, Cairo, Egypt.

DECEMBER

26 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

3Q 2024: Egyptian-Armenian Joint Committee.

November 2024: Egypt to host the World Urban Forum (WUF12).

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

End of 2024: Shalateen Mining Company to launch a gold exploration tender in the Eastern Desert.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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