Egypt Pursues Long-Term LNG Supply Deals

Egypt is negotiating multi-year liquefied natural gas (LNG) supply agreements with several major energy companies as it seeks to strengthen energy security amid declining domestic gas production and rising demand. Industry sources said the government is in discussions with Shell, TotalEnergies, BP and commodity trader Hartree Partners over contracts that would reduce its reliance on volatile spot-market purchases.

The proposed agreements would cover between 15 and 18 LNG cargoes each month under contracts lasting three to five years. Based on current market prices, the deals could cost Egypt between $8 billion and $11 billion annually. Officials believe securing long-term supplies will provide greater price stability and help meet the country’s growing energy needs.

The negotiations come as Egypt faces mounting pressure from falling natural gas production. Industry sources said output is expected to decline to about 4.2 billion cubic feet per day during the current fiscal year despite government efforts to increase domestic production. At the same time, higher electricity demand has increased the country’s dependence on imported LNG.

Egypt’s LNG import costs have also risen sharply in recent months. Sources said the country’s gas import bill increased from about $560 million before the regional conflict to roughly $1.65 billion for the same import volumes in March. The talks are also taking place against a backdrop of uncertainty in global energy markets, with tensions involving Iran and disruptions to shipping through the Strait of Hormuz affecting supply risks. The negotiations are ongoing, and no final agreements have been announced.

SOURCE: Reuters