Five years ago, Egypt was poised to become a key player in the regional and possibly global gas market. This potential was largely based on the promising Zohr gas field discovery made by Italy’s Eni in 2015. The field quickly ramped up production, reaching 2 billion cubic feet daily by September of the following year, and peaking at 3.2 billion cubic feet in 2019. However, production has since declined, falling to 1.9 billion cubic feet in the first half of this year. This decrease has not been enough to meet domestic energy needs, forcing Egypt to import gas.
Egypt has traditionally imported natural gas from neighboring Israel. Recently, however, it has also sought help from Gulf allies. According to a new Reuters report, Saudi Arabia and Libya have both provided support by funding liquefied natural gas (LNG) shipments to Egypt. Libya’s National Oil Corporation purchased one LNG cargo for $50 million in July, while Saudi Arabia covered the cost of three cargos totaling $150 million. Since the beginning of the year, Egypt has acquired 32 LNG cargos.
Gas imports are not unusual for Egypt, which typically exports surplus gas outside of the summer months. However, summer is the peak period for electricity consumption due to high temperatures, and recent years have seen a significant rise in demand that has not been matched by gas production. This imbalance has led to rolling blackouts, prompting a rush to secure additional gas supplies.
The decline in gas production this year is the lowest in six years. Contributing factors include reduced output from the Zohr field and decreased investment from major energy companies operating in Egypt. This reduction in investment is linked to unpaid debts. Reuters reports that Egypt owes approximately $6 billion for gas and other fuel supplies, with $1.27 billion of this amount owed to Eni. While some of this debt has been repaid, Eni has revised its investment plans for Egypt due to concerns over efficiency and field performance.
Petronas, Malaysia’s state oil and gas operator, is also a creditor. The company has cut back its investments in gas exploration in the West Nile Delta until Egypt repays some of its debt.
In contrast, investment firm Carlyle Group announced in June that it had acquired energy assets in Egypt from Energean. Carlyle plans to increase both oil and gas production and establish Egypt as a distribution hub for Mediterranean assets.
Egypt’s initial ambitions to become a regional gas powerhouse were well-founded. However, the country’s growing domestic energy demands—driven by population growth, urbanization, and industrialization—have outpaced its production capabilities. This year’s energy shortage underscores the critical need for reliable energy supply security amid rising domestic demands.