Reuters Exclusive: Egypt seeks LNG partnerships with U.S. to lower costs

Egypt is pursuing long-term liquefied natural gas (LNG) agreements with U.S. and other foreign companies to reduce its reliance on costly spot market purchases, Reuters reports. 

"The ministry (of Petroleum) is seeking three or four years of supply to hedge from sudden price increases. It is also seeking to include a flexibility clause as the government hopes it could maybe find gas sooner or doesn't need that much gas," an unnamed source told Reuters. 

This move comes as domestic gas production has declined significantly, with output in September reaching its lowest level in seven years, according to data from the Joint Organizations Data Initiative.  

Declines from key fields like Zohr, combined with rising power consumption due to soaring temperatures, have forced the country to pivot from being a net exporter to a net importer of gas.

Earlier this year, Egypt issued substantial LNG tenders to meet surging demand during a hot summer. However, cooler weather has led to reduced electricity needs, prompting the country to delay LNG cargo deliveries from this quarter to the next, Bloomberg reports. Despite this, Egypt has not exported LNG since April, as domestic shortages persist.

The government is reportedly preparing additional infrastructure, including a second floating storage regasification unit (FSRU), to support imports. 

With LNG spot prices rising and a foreign currency crunch exacerbating costs, Egypt remains focused on addressing its energy crisis. Domestic production is expected to decline further by 2028, while power consumption could increase by nearly 40% within a decade.