Egypt scrambles to secure energy sector as Israeli gas cut-offs disrupt power grid

The National

3 hours ago

Israeli gas supply to Egypt was cut off again on Sunday night as the war with Iran continues to intensify, two government sources overseeing the matter confirmed to The National on Monday.
Supplies had resumed on Thursday following a six-day halt since June 13 when Tel Aviv launched an attack on Iranian nuclear sites and killed top Iranian military officials and nuclear scientists.
Israel shut down two of its three gasfields on the day it attacked Iran. Israeli officials said this was a precautionary measure taken in anticipation of an Iranian retaliation, which came later the same day.
The enemies have been exchanging missile and drone strikes since then with large-scale infrastructure destruction and casualties reported on both sides. Gas supplies to Egypt and Jordan were halted and prioritised for local use in Israel, and on June 13 the Egyptian government forced fertiliser factories to halt production nationwide given the large amounts of natural gas they use.
The government said it was prioritising the energy requirements of power stations, especially because of the heavy use of fans and air conditioning units in Egypt in summer. Israeli gas supply to Egypt resumed on Thursday, though in much lower quantities, the two sources said.
This was because only gas coming from the Tamar field resumed. The larger Leviathan field was ordered shut by the Israeli energy ministry – Chevron, which runs the field, has ceased all production there since.
However, supplies to Egypt were halted again four days after resuming, the officials said, underscoring that the halt came after the US's contentious intervention in the Israel-Iran war on Saturday, when it launched a series of air strikes on Iranian nuclear enrichment sites. The move has stoked fears of an intense Iranian response and a long, drawn out war in the region.
Before supplies were halted, Egypt was importing around 1 billion cubic feet per day from Israel, accounting for around 13 per cent of Cairo's total daily consumption of around 7.5 billion cfd, of which around 3.8 billion is produced locally.
To counter the unexpected drop in supplies, Egypt made arrangements to use three floating regasification units, two in the Red Sea and one in the Mediterranean, according to one of the sources. These will receive shipments of liquefied natural gas, regasify it and then pump it through the national power grid.
The vessels were acquired late last year to help mitigate power cuts this summer by diversifying the country's sources of energy, according to a speech on Saturday by Prime Minister Mostafa Madbouly in the Red Sea port city of Ain Sokhna.
Mr Madbouly was there to witness the first of the three additional regasification units being connected to the power grid. It is the second such unit operating in Egypt after one was put into service last year to help with energy shortages at the time. The other two are expected to enter service by next month, he said.
Each of the ships has the capacity to produce between 600 million and 750 million cfd, which would easily cover the drop in natural gas supplies from Israel, according to multiple officials, including the Prime Minister. One of the units was previously stationed in Aqaba, Jordan, under a 2024 agreement between Egypt and Jordan to optimise gas supply.
The agreement allowed Jordan to access Egypt's floating storage and regasification units via the existing pipeline network between the two countries. The relocation of the unit to Ain Sokhna at Egypt's request earlier this month means that Jordan will get its share of gas through pipelines from Egypt rather than through its own grid at Aqaba.
Jordan's share of LNG under the deal is 350 million cubic feet per day, but it is now receiving about a third of that due to shortages, the officials said. Shipments of LNG have continued to arrive in Egypt, according to Mr Madbouly, and several are waiting to be unloaded on the floating regasification units.
A stopgap supply of LNG was provided to Egypt on short notice from Saudi Arabia's national energy company Aramco. Additionally, some shipments were provided by commodity trader Trafigura, according to data collected by Mohammed Ragab, a financial analyst. He praised the government's handling of the energy crisis this summer.
Cost-saving measures
In addition to the diversification of its sources of fuel, the Egyptian government has also introduced a number of cost-saving measures including shutting off street lights in residential neighbourhoods and closing government buildings by 8pm. Mosques and churches have been instructed to turn off their lights when prayers are finished and billboard lighting was also turned off, among other measures.
Despite these measures, power cuts have been reported in various rural provinces over the past week, according to one of the government officials who spoke to The National on the condition of anonymity. Mr Madbouly addressed the matter during a speech last week and said that this was due to maintenance work in preparation for the summer season.
However, the official said that 'while the outages were not directly caused by natural gas shortages, the whole mechanism has been deeply disrupted by Israel cutting off gas so abruptly'. He added that 'switching to different sources of fuel will require structural changes to the existing mechanism that might cause more power cuts down the line'.
As power cuts in Egypt look more likely amid the recent escalation between Iran, Israel and the US, there are growing fears in Cairo that a prolonged war might cause much deeper damage to its already vulnerable economy, particularly because of its heavy reliance on imports and investment. 'Interbank data shows that large amounts of hot cash were withdrawn from Egyptian markets in the days following Israel's attack on Iran,' Mr Ragab told The National.
'Though these numbers have started to rebound slightly, a prolonged war could very well result in the exit of larger amounts of cash invested in Egypt's short debt markets which would cause a similarly disastrous inflationary wave as the one that took place in the wake of Russia's invasion of Ukraine.'
As the region braces for the next phase of the Israel-Iran war, Egypt faces mounting challenges in safeguarding its energy security and economic stability. While government efforts to diversify energy sources and introduce cost-saving measures have provided some relief, the abrupt disruptions in Israeli gas supplies have exposed the fragility of its energy infrastructure.