Egypt plans to resume exports of liquefied natural gas in the fall after rising domestic demand led to a halt in shipments over the summer.
The hot weather means Egypt is consuming all the gas it produces, leaving little for exports, Energy Minister Tarek el-Molla told reporters in Cairo. The return of supplies from the North African country will mean greater availability for key buyers in Europe and Asia ahead of the winter heating season, when demand from those regions increases.
LNG shipments from Egypt’s two production plants tend to decline during the hottest months as demand at home for power generation increases. The country exported no cargo last month and has sent just one shipment so far in July, ship tracking data on Bloomberg shows.
While the minister did not mention any production issues, concerns have been raised that gas production is declining amid water seepage issues at the massive Zohr gas field.
The problems mean Egypt’s gas output is forecast to fall 4 percent this year to a three-year low, according to BMI Research, a Fitch Solutions firm that previously estimated 1 percent growth. This will mean a drop in LNG exports this year.
While the shipment shutdowns point to an increase in cooling demand in the summer, “it also highlights the declining production trend in Egypt’s domestic gas fields, particularly Zohr,” said Leo Kabouche, an analyst at Energy Aspects Ltd. to London.
Last year, however, was an exception. The country took advantage of rising global gas prices by exporting the super-cooled fuel even during hot months while importing cheaper heavy fuel oil, el-Molla said. Falling international prices this year make it cheaper to consume the fuel domestically, he said.
