Recent reports indicate that Egypt is currently negotiating with Germany to lease a new liquefied natural gas unit ahead of a potential spike in demand in the coming months.
As per the oil Ministry in Cairo, a delegation has been put together to visit the European nation to conclude on contractual terms for the unit, which is currently situated at the Mukran terminal on the Baltic Sea.
A statement released by the Ministry to this effect points out that the North African country, as per the contract being discussed, would receive the floating German LNG unit on the Egyptian coast.
The statement further reveals that a different German plan to purchase Cypriot gas flows that are scheduled to go via Egypt’s liquefaction infrastructure is also being discussed.
Egypt, which is known for exporting LNG, had to rely on importing the product after its energy sector hit a snag.
This trade tilt was a result of the power outages the country experienced during the year, which since July 2023 led to load shedding which denoted a scheduled two-hour daily power cut in most areas.
At the time, the country’s Prime Minister Mostafa Madbouly cited a need to import about $1.18 billion worth of natural gas and mazut fuel oil to address the ongoing blackouts.
Egypt primarily generates electricity by burning natural gas.
As seen on Bloomberg, Europe, which has been purchasing more LNG to compensate for lost Russian piped supplies, is now in competition with Egypt as a buyer.
To combat shortages, Egypt is making concerted efforts to secure both short-term and long-term gas supplies. The Northern African country leased a floating LNG import station at the Red Sea port of Ain Sokhna last year.
Midway into the current year, another plant is expected to arrive from Jordan and be up and running, as soon as possible.
Furthermore, Egypt has begun talks with Italy’s Eni SpA to build a new facility and is considering leasing one of Turkey’s floating terminals.
Egypt has become a net importer since power consumption has increased and the local gas supply has decreased significantly.
Additionally, a foreign currency shortage has hampered the government’s capacity to fulfill overdue payments to multinational energy companies, inhibiting investment in production.
To solve this, Egypt has implemented a strategy to repay its debts monthly and hopes to resume gasoline exports by the end of 2027.
