Egypt announces tender submitting proposals for the purchase of 15 to 20 LNG cargoes. This proposal aims to mitigate the high summer demand that has led to power outages and temporary shutdowns of chemical and fertilizer plants.
A large LNG cargo purchase bidding process
The Asian country, which until recently stood out as a net exporter of natural gas, has reversed its position due to a strategic plan to become a reliable supplier for Europe. This transformation underscores the complexity of the Egyptian energy market and its aspirations to strengthen its presence in the international arena.
In addition, natural gas natural gas supplies for power generation in Egypt have been dwindling. in Egypt have been declining. During the summer, the need for cooling further increases energy consumption, exacerbating the situation and raising energy demand.
On the other hand, the tender is expected to be issued between the second half of June and early July, in order to cover the seasonal demand from July to October. A source stressed that this announcement is conditional on the appointment of the new energy minister, given that President Abdel Fattah al-Sisi has ordered the formation of a new cabinet.
LNG imports
Since the end of 2018, Egypt has not imported LNG, except for four domestically produced cargoes received at its floating storage and regasification unit (FSRU), and one partial cargo re-exported in 2023, according to data from S&P Global Commodity Insights.
This year Egypt has bought four cargoes on the spot market, paying a high premium due to the urgency of deliveries. In addition, two of these cargoes, destined for April and May, were purchased at a premium of between $1.3 and $1.7 per million British thermal units (mmBtu) over the Dutch TTF hub price.
It also adds the observation of Samuel Good, head of LNG pricing at Argus, who stated that Egyptian demand has influenced higher delivered prices in Italy, Greece and Turkey, outperforming TTF and NW Europe prices.
Egypt’s energy security strategies
In May, EGAS( EgyptNatural Gas Holding ) signed an agreement with Norway’s Hoegh LNG to lease the FSRU Hoegh Galleon from June 2024 to February 2026, ensuring energy security backup.
Also, several Egyptian chemical and fertilizer companies have temporarily closed their factories due to pressure on the natural gas network. The Ministry of Petroleum announced that gas supplies will be gradually resumed to the fertilizer factories in the coming weeks.
Finally, Egypt’s natural gas production in 2023 fell to its lowest level since 2017, with output of approximately 59.29 billion cubic meters (bcm), representing a decline of 11.5% year-on-year. In conclusion, the scheduled power outages have come as a surprise to the Egyptian population, accustomed to years of reliable power supply under President Sisi’s administration.
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Source: Offshore Engineer
Photo: Shutterstock
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