Egypt is Scrambling For Cheap Oil and LNG as its Energy Crisis Deepens
Egypt is once again facing a resurgence of natural gas shortages, drawing headlines as the country enters the peak summer season. With soaring temperatures above 40°C expected in the coming months, electricity demand—driven largely by air conditioning—is putting intense pressure on the national grid. In response, the Cairo government is scrambling to implement emergency measures to avoid blackouts.
Despite Egypt's ambition to become a regional energy hub and key LNG supplier to Europe and global markets, the country is struggling to meet domestic power needs. This paradox underscores the challenges Egypt faces in balancing its export goals with internal energy security.
Strained Resources and Lagging Investment
Egypt's energy challenges are compounded by sluggish economic growth, ongoing financial instability, and limited foreign investment. The country continues to fall short of its natural gas production targets, most notably at the giant Zohr offshore gas field, which is grappling with technical difficulties. Meanwhile, expected output from other fields has yet to materialize.
Turning to Long-Term LNG Imports
In a bid to alleviate the recurring natural gas shortages, the Sisi government is accelerating efforts to secure long-term LNG import deals. Recent reports from regional sources suggest that Egypt is in advanced talks with Qatar over a long-term agreement to supply Qatari LNG. This was a central topic in a meeting between Egypt's Minister of Petroleum and Mineral Resources, Karim Badawi, and Qatari Energy Minister Saad bin Sherida Al-Kaabi.According to Al-Ahram, a state-affiliated newspaper, Cairo is eager to finalize an agreement swiftly. As part of the broader talks, Egypt is offering Qatar investment opportunities in both its upstream and downstream oil and gas sectors. Sources indicate that QatarEnergy's existing concessions in Egypt, including offshore Mediterranean blocks like Nefertari, Masry, and Cairo (in partnership with ExxonMobil), could be expanded.
In a further sign of strengthening ties, QatarEnergy has agreed to acquire a stake in Egypt's North El Dabaa offshore block, in cooperation with EGAS and U.S. energy major Chevron.
Disruptions in Regional Gas Supply
Egypt's energy situation has worsened following an unexpected delay in natural gas exports from Israel. Under a new deal, Israel was to supply 200 million cubic feet per day starting mid-May. However, local media outlet Watan reports that the Israeli side is seeking better terms and higher prices, according to the Egyptian General Petroleum Corporation (EGPC).
The timing is surprising, given that Israel has just completed a 46-kilometer expansion of the offshore gas pipeline connecting Ashdod and Ashkelon with Egypt's network in Arish. This infrastructure was expected to boost daily imports from Israel from 1.0 to 1.2 billion cubic feet, feeding Egypt's LNG export terminals at Idku and Rosetta.
Emergency LNG and Fuel Oil Measures
In parallel, Cairo is ramping up efforts to secure 14 LNG shipments this month from European and U.S. suppliers under deferred payment terms. The urgency has grown as Italy's Eni has been unable to meet its delivery schedule for an additional 250 million cubic feet per day from the Zohr field, now delayed from April to late August 2025.
While Egypt remains a significant oil and gas producer, the domestic supply shortfall has forced the country to seek an estimated $7 billion in funding to purchase 155–160 LNG cargoes in 2025. Cairo aims to cap purchase prices at $14 per MMBtu—an ambitious target even as global LNG prices soften.
Return to Oil for Power Generation
In a controversial move, Egypt is reverting to using cheap fuel oil for power generation—an older practice that environmentalists are likely to criticize. In recent hours, EGPC has issued a tender for 2 million tons of fuel oil to be delivered in May and June. With natural gas becoming increasingly expensive and straining public finances, fuel oil is seen as a more viable short-term alternative.
By Cyril Widdershoven for Oilprice.com
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