Egypt set for more LNG imports until winter

Egypt’s LNG imports may extend into winter: The Egyptian General Petroleum Corporation (EGPC) has issued a tender for 17 shipments of LNG for its floating import terminal at Ain Sokhna, with an additional three cargoes set for delivery to Jordan’s Aqaba, a government source told EnterpriseAM Egypt. The 20 shipments are expected to be delivered from October through December, marking one of the state-owned firm’s largest ever tenders, with the bidding window set to close on Thursday, 12 September.

With more expected in early 2025: “We will need to import another 17-20 shipments in 1Q 2025,” the source added.

Egypt’s wasn’t expecting such a stretch for LNG imports: The Egyptian government originally laid out a USD 1.2 bn plan to import fuel to power energy plants to bridge the supply gap until the end of summer, and made orders to import around 21 shipments of LNG with the assumption that demand will decline during winter and there will be no need to import until the weather starts heating up again next year.

Remember: Power cuts are set to return next week after an eight-week hiatus, before ending for good by the end of the year.

Imports at this time are rather uncommon for Egypt: “Egypt has really been the surprise on the global LNG market,” Columbia University researcher Anne-Sophie Corbeau told Bloomberg, “production has totally collapsed … either you reduce demand or you increase net imports.” Egypt’s extended demand for LNG caused a rise in European natural gas prices, which rose as much as 4% on Friday, the business news service added.

The move isn’t just about filling a supply gap: The Egyptian government apparently resorted to this solution to avoid two potential problems:

• Any possible arbitration claims from liquefaction plant operators: The government will direct more of the local gas production to the two liquefaction plants in Idku and Damietta, while directing more LNG imports for local consumption. This should help avoid any possible arbitration claims by the liquefaction plants’ operators after the quantities of gas supplied to them declined recently.
• Keeping foreign energy players happy so the investments keep coming in: The government will direct more domestic natural gas production to export and will allocate the export proceeds to international oil companies as part of the government’s efforts to encourage new foreign investments and pay arrears owed to the foreign companies.

On the topic of restarting LNG exports: The government is planning to resume gas supplies to its Idku plant as early as 4Q 2024, Asharq Business reports, citing a source from Shell — a shareholder in the Idku plant. The government is looking to supply Egyptian LNG — a joint venture between EGAS, EGPC, Shell, and Petronas — with some 7.2 mn metric tons of natural gas annually, the source added.

Egypt still eyes becoming a net LNG exporter once again in the long run: The government does not want to resort to long-term contracts despite the current favorable prices amid hopes of new natural gas discoveries that could put Egypt once again to the global export map, along with expanding renewable capacities, the source explained.

IN OTHER LNG NEWS-

#1- BW LNG charters a floating LNG storage unit: Norway’s BW LNG signed a 10-year charter with Jordan’s National Electric Power Company (NEPCO) to deploy a floating storage unit (FSU) at Aqaba’s Sheikh Sabah LNG terminal, according to a press release on Thursday. The operations, which are slated to start between 3Q and 4Q 2026, come under efforts to boost the country’s energy security. Under the agreement, NEPCO will acquire ownership of the vessel at the end of the charter period.

#2- Cyprus-Egypt energy corridor talks heat up: Egypt and Cyprus have “begun serious steps” to reach an agreement to build a 90-km marine natural gas pipeline to connect the two countries, Asharq Business reports, citing an unnamed government official. We also finally heard some concrete details on the pipeline, with the official telling the outlet that the pipeline will connect the Aphrodite gas field in Cypriot waters to the Zohr field’s production facilities in Egypt, carrying 1 bn cubic feet of gas per day.