Egypt aims to increase exports of liquefied natural gas by about 40% from 2025, with most of the additional fuel shipments going to Europe.
The continent is rushing to secure more LNG from the Middle East, the US and other regions as it plans for a future virtually without gas from Russia, by far its main supplier before Moscow’s invasion of Ukraine.
Egypt’s exports this year are likely to remain stable at around 7.5 million tonnes, according to Energy Minister Tarek el-Molla. Its two LNG terminals on the Mediterranean coast are designed to ship 12 million tonnes a year, but reaching those levels will depend on Egypt pumping more gas and receiving more flows from Israel, he said.
“I would expect to reach maximum capacity by 2025,” el-Molla said in an interview in Cairo on Tuesday. “That’s when the current drilling campaign we’re doing will materialize.”
While this will help strengthen Europe’s long-term energy security, it will be this year and 2024 when global LNG supplies will be particularly tight. Like Egypt, Qatar and the US are also expected to increase exports significantly from the middle of the decade.
Egypt and Israel are in talks to increase Israeli pipeline gas flows to the North African country, el-Molla said. Much of this Israeli gas is re-exported as LNG from the ports of Damietta and Idku.
The two governments signed a memorandum of understanding with the European Union in June with the aim of increasing volumes in Europe.
Egypt’s current flows make it a relatively small LNG exporter. But increasing those to 12 million tonnes a year would make it one of the world’s 10 biggest suppliers, at least based on last year’s figures.
Prices are still good
El-Molla said Egypt will not consider building new LNG terminals or expanding any existing ones until it has more gas to ship abroad. The country splits its LNG sales roughly equally between long-term contracts and the spot market and will likely stay that way, he said. The high volatility of the spot market (gas prices in Europe rose to almost $100 per million British thermal units in August before collapsing to $24 by the end of the year) means that Cairo wants to avoid being too exposed to this.
Prices have dropped further to $16.50 per mmbtu, but that is “still good,” el-Molla said. “It’s covering our investments and there’s a good margin.”
He expects about $8 billion of investment in oil and gas exploration in Egypt this year.
“There is a lot of interest from international energy companies,” he said, adding that Exxon Mobil Corp., BP Plc and Shell Plc and others were willing to push their operations upstream.
Egypt pumps about 600,000 barrels of oil a day, but almost all of that is used to service its population of 104 million people.
It no longer covers any imports of crude oil and refined fuel to protect against higher prices, according to the minister.
“With the volatility of oil, hedging is very expensive,” he said.
–With the assistance of Samuel Dodge and Anna Shiryaevskaya.
