Egypt is holding discussions with the United States and other international corporations concerning the potential acquisition of substantial amounts of liquefied natural gas (LNG) over a prolonged period. This move is driven by Egypt’s desire to lessen its reliance on more expensive transactions in the spot market to satisfy its electricity demand, as stated by three reliable sources.
The most populous Arab country has shifted back to becoming a net importer of natural gas, purchasing numerous cargoes throughout the year and abandoning plans to act as a gas supplier to Europe, following a notable decrease in its domestic gas output.
“The ministry (of Petroleum) is seeking three or four years of supply to hedge from sudden price increases. It is also seeking to include a flexibility clause as the government hopes it could maybe find gas sooner or doesn’t need that much gas,” the first industry source said, as reported by Zawya.
Cairo is primarily engaging in negotiations with American corporations and investment firms that have American sales agreements, due to their adaptability being superior to other producers, as mentioned by two other trading sources.
Furthermore, Egypt, which paid a premium of USD 1 to USD 2 for its LNG purchases earlier this year, is expected to issue a tender seeking up to 20 LNG cargoes to meet its demands for the first quarter of 2025, as per the information provided by these sources to Reuters in October.
LNG spot prices have recently increased to around USD 14.50 per million British thermal units (mmBtu), rising from approximately USD 12/mmBtu when Egypt commenced tendering for LNG. This price escalation is resulting in higher expenses for new cargo shipments during a period when Egypt is experiencing a foreign currency crisis.
The initial report suggests that Egypt is laying the groundwork for gas imports in both Ain Sokhna and Alexandria. Data analytics company Kpler reported recently that Egypt was planning to add a second floating storage regasification unit (FSRU) at the beginning of the coming year.