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Al-Ahram Weekly

Fertiliser manufacturers stay positive - Economy - Al-Ahram Weekly

Fertiliser companies are considering the use of oxygen in combustion processes to reduce gas consumption, in addition to increasing reliance on carbon dioxide recovery for use in ammonia production, Khaled Abul-Makarem, chairman of the Chemicals and Fertilisers Export Council (CEC), told Al-Ahram Weekly. The move follows the Ministry of Petroleum's announcement that it is activating its emergency supply plan after the suspension of gas imports from the east of the Mediterranean. Natural gas is a raw material in the production of nitrogen fertilisers, accounting for more than 70 per cent of inputs, according to Abul-Makarem. Egypt imports around 800 million to one billion cubic feet of gas daily from Israel's Tamar and Leviathan fields under a 15-year agreement to help cover its gas deficit of 3.5 billion cubic feet. The two Israeli fields suspended production for a few hours after the beginning of the reciprocal attacks between Iran and Israel. Egypt's fertiliser factories are currently operating at partial capacity depending on the amount of gas available to each plant and leading them to schedule production more carefully and minimise waste, Abul-Makarem explained. There is ongoing communication with the Ministry of Petroleum to ensure the delivery of the minimum supply required for production, he added. On Saturday, Prime Minister Mustafa Madbouli said that this year Egypt will host three floating storage regasification units (FSRUs) for liquefied natural gas (LNG). He emphasised that this is not a result of the recent Iranian-Israeli conflict but rather the outcome of efforts that began more than six months ago, according to a cabinet statement. Following last summer's supply crisis, promises were made to develop a comprehensive five-year solution. In June 2024, the country's fertiliser factories faced gas shortages that led companies like Abu Qir Fertilisers to shut down its three plants due to shortages in the natural gas supply. Madbouli confirmed that by July this year Egypt will have three LNG regasification vessels injecting gas into the national grid to meet the country's needs and not only to handle high summer consumption but also to support industrial demand. He added that LNG regasification is a transitional solution. As Egyptian gas production stabilises and increases, the government plans to gradually phase out dependence on regasification vessels, he said. The government had responded to the recent crisis more effectively due to lessons learned over previous months, Abul-Makarem said. Local consumption of fertilisers ranges between five to six million tons annually, he added. Domestic factories meet most of the local demand, especially for nitrogen fertilisers, and there is only minimal reliance on importing certain compound and potash fertilisers that are not produced locally, he added. About 35 per cent of fertiliser production is consumed domestically and the rest is exported, Abul-Makarem said. France, Italy, and Spain are among the main European importers of Egyptian fertilisers. In Africa, the key markets include Kenya, Sudan, and Ethiopia. In Asia, Egypt exports to India, Bangladesh, and Turkey, while Brazil and Mexico are the primary markets in Latin America. If fertiliser prices rise in the local market, this will increase the cost of food production, in addition to directly affecting agricultural and food industries tied to crop production, Abul-Makarem warned. He added that rising prices will also increase the pressure on the government to subsidise fertiliser prices or reallocate export priorities to serve the local market. He said that the current gas crisis has opened the door to a black market for fertilisers, with some traders exploiting the situation by stockpiling them and inflating prices. However, the government is working to counter these illegal practices, he added. He explained that exporters are now negotiating with clients to reschedule delivery dates and reprioritise production for stable, long-term markets, while also negotiating with shipping and insurance companies to reduce the impact of rising costs. He added that if gas supplies return to normal, the factories will work to compensate for the recent shortages by aiming to match or exceed last year's export revenues, which reached about $3 billion. Sherif Al-Gabali, chairman of the Chamber of Chemical Industries at the Federation of Egyptian Industries, told the Weekly that factories will benefit from the current halt by conducting maintenance on their production lines. He explained that the crisis mainly affects nitrogen fertiliser production, which is produced by around six factories. Al-Gabali anticipates that natural gas levels will return to normal next month, which will restore production to its normal levels and positively impact the Egyptian economy. * A version of this article appears in print in the 26 June, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link: