Egyptian authorities are in talks to lease a floating storage regasification unit (FSRU), with plans to dock the terminal at the Gulf of Suez, an Egyptian Oil Ministry source told Enterprise. Egypt is seeking a five-year extendable contract, they added.

Why? Because Egypt is back to importing LNG. The Egyptian government has purchased at least two shipments of LNG and could contract for more shipments soon as it looks to stock up on gas supplies ahead of peak consumption in summer, our source said. The first two shipments will be regasified in Jordan’s Aqaba to be delivered next month. Egyptian Natural Gas Holding has locked in one shipment for delivery next month, with plans for more deliveries, sources told Bloomberg on Thursday.

ICYMI- Egypt and Jordan last year inked an agreement to reduce operational costs of LNG shipments by jointly using the floating LNG terminal at Jordan’s southern port of Aqaba.

Remember: Egypt had bid farewell to the era of leasing FSRU years ago when it ended a contract with the Norwegian Höegh Gallant in 2018 as the government pulled the plug on gas imports following the discovery of Zohr field, which has allowed Egypt to re-emerge as a natural gas export hub.

But isn’t Egypt a net exporter of LNG? After becoming a net exporter of LNG in 2018, Egypt has been trying to position itself as an important LNG exporter to Europe and to fully utilize the 12 mn tons a year capacity from its two liquefaction plants in Damietta and Idku. However, a fall in domestic gas production resulted in LNG exports dropping 52% y-o-y to 3.52 mn tons in 2023. Domestic natural gas production has dropped to 5.5 bn cubic feet per day from 7 bn cubic feet per day following the Zohr discovery, our source said, explaining that it’s normal for gas fields to yield less output over time. Israeli imports bring total production to 8.8 bn cubic feet per day, the source added.

While consumption is on the rise: With hotter weather arriving earlier than usual this year on the back of climate change, this summer is expected to lead to a higher consumption of energy than last year, our source said. Consumption is also expected to remain higher than production as Egypt sets up more power stations and as the uses of domestic and industrial gas expand.

IN OTHER EGYPT NEWS- Importers abandoning their goods at Egyptian ports could be slapped with fines: The Central Bank of Egypt (CBE) is looking into imposing fines on importers who refuse to move their goods from ports even after receiving the required FX to do so, Al Mal reports, citing sources it says have knowledge of the matter

That’s not all: The CBE is also looking into blacklisting the importers who don’t clear their goods from ports — issuing instructions to have their bank accounts monitored, Al Mal added.

Still early stages: The central bank is yet to take any official steps regarding the matter, a government source told Enterprise, adding that each case will be evaluated individually.

Why would an importer not collect their goods? Some importers have declined to receive their goods as they wait for the USD-EGP rate to further depreciate, which will in turn mean a cheaper customs bill — importers can store their goods at local ports for up to a month without paying any fees or fines, according to the current regulations. Meanwhile, some importers of foodstuff have abandoned their imports that have been stuck at ports for some time now while the FX crisis get resolved as a way to avoid paying hefty storage costs and fees, especially knowing that there is a high chance their goods have gone bad and won’t be sellable, our source said.

Importers are already moving: There has been a noticeable shift in the rate at which importers are collecting their goods since Egyptian Prime Minister Moustafa Madbouly unveiled the government’s plan to confiscate neglected goods, our source tells us.

REMEMBER- The government has cleared some USD 2.8 bn worth of goods from the country’s ports thanks to the recent spate of foreign currency injections as of late March. Some remaining USD 1.7 bn of goods have had their paperwork completed and secured the required FX through the banking system, but these goods remain unclaimed by their importers, Madbouly said two weeks ago.

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