Egypt’s gas import bill jumps $700 million

Egypt has allocated about $1.3 billion to import liquefied natural gas for the domestic market in October, about $700 million more than a year earlier, as higher global gas prices raise the cost of securing supplies, a source at state-owned Egyptian Natural Gas Holding Company (EGAS) said.

The higher import bill comes as Egypt faces a widening gap between domestic gas production and consumption. Production has fallen to about 3.8 billion cubic feet per day (bcfd), from around 4.1 bcfd during the same period last year, while consumption is close to 7.2 bcfd, the source said.

Egypt plans to import 20 LNG cargoes in October, the same number as in October last year, but each cargo will contain about 120,000 cubic meters, compared with 90,000 cubic meters a year earlier. The higher cost is also being driven by global gas prices, which have risen amid regional tensions, the source said.

Each cargo will cost between $60 million and $65 million and will be sourced from markets including the United States, Mauritania, and Trinidad and Tobago as Egypt seeks to cover the domestic supply shortfall.

LNG imports are covering part of the gap between production and consumption alongside pipeline gas imports. The government is also operating regasification vessels to convert imported LNG back into gas and pump it into the national grid.

The Ministry of Petroleum said in June that Egypt’s LNG import system, including regasification vessels at Ain Sokhna, was ready to secure supplies during periods of high demand.

The source said higher global demand for LNG, changing supply levels and price movements are making import costs vulnerable to fluctuations, increasing the importance of raising domestic production and reducing reliance on imports.

Prime Minister Mostafa Madbouly said in March that Egypt’s monthly natural gas import bill had risen from about $560 million to $1.6 billion.

The Ministry of Petroleum is working to increase natural gas production by intensifying exploration and development of existing fields and accelerating the addition of new discoveries to the production map, the source said.

The ministry announced this month that it aims to add about 330 million cubic feet per day to domestic production from fields in the Mediterranean and Western Desert before the end of the year, as part of a plan to restore production growth and increase local supplies.

Egypt will continue relying on gas imports until the production increases begin to yield results, the source said. The additional supplies are needed to maintain the stability of the gas network and meet demand from the electricity, industrial and other consuming sectors.