Egypt is set to reduce its contracted LNG shipments for January from commercial suppliers by over 50% — down to six or seven shipments — compared with 14 to 16 shipments in January of last year, a senior government official tells EnterpriseAM. This move comes amid sufficient strategic reserves and a dip in domestic demand thanks to cooler temperatures this winter.

Contractual flexibility: Egypt benefits from a “flexibility” clause (±10%) in its contracts with foreign suppliers, the source tells us, allowing it to postpone or cancel non-essential shipments without incurring hefty penalties. Flows are expected to return to normal by March, with a greater focus on addressing actual gaps.

At the same time, the government is looking to diversify import sources through a new strategic partnership with Doha. Oil Minister Karim Badawi and his Qatari counterpart Saad Sherida Al Kaabi signed an MoU yesterday to boost cooperation in LNG sales and imports.

What’s on the table? As part of the agreement, state-owned Egas and QatarEnergy will supply Egypt with up to 24 LNG cargoes for summer 2026, to be delivered at Ain Sokhna and Damietta ports. Talks on a longer-term supply agreement are also underway. QatarEnergy — which currently holds interests in six offshore blocks — plans to launch a new drilling campaign and has an appetite to invest in energy here over the next five years.

Taken together, this is good news if you’ve been concerned about twin problems: The specter of rolling blackouts (due to poor supply) and the high cost to the state of imports. The Madbouly government has, over the past year, been working to move out of “emergency mode” and rebuild a long-term supply of natural gas rather than scrambling to secure cargoes.

Reducing shipments and locking in fresh supply from Qatar on a long-term contract will save hundreds of mns in FX and reflects policymakers’ confidence in the stability of flows from the East Gas Pipeline (the agreement we inked with Israel last month) as well as an uptick in domestic natural gas production.

A regional energy hub once again?

Officials are talking up the new agreement to sell natural gas to Lebanon. The agreement to supply Lebanon with gas via Jordan and use regasification units at the port of Aqaba will bolster Egypt’s role as a logistics provider in the energy sector, our source tells us. Egypt will receive a “regasification commission” for managing these flows to neighboring countries, at a competitive price that positions Egypt among regional gas suppliers.

And the market is in our favor: As a result of settling arrears, suppliers are now competing to offer Egypt prices that are approximately USD 2 lower per mn British thermal units compared to last year, our source tells us.

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