Egypt has signed agreements with Shell and TotalEnergies to import 60 cargoes of liquefied natural gas (LNG) in 2025, valued at approximately $3 billion.
This decision comes as Egypt transitions back into being a net importer of natural gas, a shift driven by declining domestic production and rising energy demands.
Egypt’s domestic gas production has experienced a significant drop, reaching a seven-year low in September 2024.
This decline is largely attributed to reduced output from the Zohr gas field, which has been a crucial source of domestic gas, along with an increase in power consumption across the country.
According to Energy Aspects, a consultancy firm, Egypt’s domestic gas output is expected to fall by 22.5% by the end of 2028, emphasizing the need to secure external supplies.
Under the newly signed agreements with Shell and TotalEnergies, the LNG cargoes are scheduled for delivery starting in 2025.
The pricing of the deal is tied to the Dutch Title Transfer Facility (TTF), the standard for gas pricing in Europe, allowing for price adjustments based on market fluctuations.
This pricing structure provides some flexibility in dealing with volatility in the global gas market.
Moreover, the agreements come with extended payment terms, which will enable Egypt to spread payments over a year, unlike previous contracts that required full settlement within 180 days.
This new arrangement is designed to alleviate Egypt’s cash flow pressures while ensuring a steady supply of LNG.
Egypt had resumed LNG imports in 2024 for the first time since 2018, after local authorities initiated several tenders to meet the increased demand for power generation and industrial use.
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Around 20 cargoes were purchased for the latter half of 2024, and these imports were especially necessary during the summer months, when air conditioning demand peaks.
In the second half of 2024, Egypt turned to the spot market to meet urgent needs, paying a premium of $1–2 per million British thermal units (MBtu) for several cargoes.
However, with LNG spot prices in 2025 averaging over $14 per MBtu, up from $12/MBtu when Egypt began its tender process, the financial burden on the country has increased.
Given the shortage of foreign currency, Egypt is exploring additional ways to secure its energy supply, including the issuance of a tender in January for four LNG cargoes to be delivered between February and March 2025.
There is also a possibility of another spot tender later in the year, depending on market conditions and demand.
In addition, Egypt is reportedly in discussions with various consortia to consolidate a competitive LNG offering and is considering long-term contracts to hedge against future price hikes.
These initiatives are aimed at stabilizing Egypt’s energy supply, alleviating domestic demand, and improving its regasification infrastructure.
Though Shell and TotalEnergies have not yet made public statements on the deal, industry experts recognize the importance of these agreements for Egypt to meet its energy needs and avoid potential power shortages.
The deals also reflect a broader trend of countries relying on imported LNG to bridge the gap between domestic production and consumption, especially in light of decreasing output from established gas fields.
This partnership underscores Egypt’s continued efforts to secure its energy future and highlights the growing role of LNG in addressing global energy challenges.
