Egypt is planning to secure four liquefied natural gas (LNG) regasification vessels to avoid summer power cuts, Prime Minister Mostafa Madbouly announced last Wednesday.
While the vessels could cost the country up to $9 million a month in rental fees, energy experts say they are necessary due to low domestic production and unreliable imports from Israel.
Tackling summer challenges
A source at state-owned Egyptian Natural Gas Holding Company (EGAS), speaking on condition of anonymity, told Al Manassa that the company aims to operate five regasification vessels during the 2025-2026 fiscal year to bridge the gap in gas supply, which typically peaks during the summer.
Four vessels are expected to be in use from July to December, with the fifth entering service in 2026.
The source added that the vessels are operated by companies from Norway, the US, Germany, Turkey, and Cyprus. The Ministry of Petroleum expanded its rental agreements for these vessels in 2024, signing a contract with Australia’s Hoegh Galleon as domestic production fell, and Israeli gas imports became irregular during the war on Gaza.
Gas flows from Israel recently fell again, reportedly due to maintenance work in Israeli fields. According to the source, Egypt is currently relying on a single regasification vessel, Hoegh Galleon, which can handle five to seven LNG shipments per month.
This capacity is expected to grow as the government ramps up imports to meet peak summer demand, which typically reaches 6.5-7 billion cubic feet per day.
EGAS is finalizing preparations to operate a second vessel, Energos Power, which arrived in Egypt last Monday. It will undergo a five-day test run before accepting shipments in early June, the source said.
Last month, the Ministry of Petroleum welcomed Energos Power, owned by US-based New Fortress Energy, which arrived from Germany with a storage capacity of 174,000 cubic meters of LNG. The source explained that the surge in LNG vessels is mainly due to Egypt’s growing need to import gas, as the Ministry of Petroleum plans to bring in 80 to 90 shipments from global suppliers between June and December.
“Domestic supply, including Israeli imports, is around 5 billion cubic feet per day,” the source said. “So EGAS had to contract extra LNG shipments to cover the market shortfall.”
The source noted that EGAS considered peak demand periods when planning, ensuring that one of the four vessels could serve as a backup during high consumption periods.
The monthly rental cost of the regasification vessels ranges from $7 million to $9 million, which places an additional burden on the petroleum ministry’s budget for meeting Egypt’s gas and fuel needs.
Egypt’s trade balance data for the second half of 2024 showed that the country’s petroleum imports rose by more than $3 billion compared to the same period the previous year, reaching $9.6 billion.
A New Era
Egypt’s reliance on Israeli gas imports, which began in 2020, sparked controversy not only because of public opposition to dealings with Israel but also because it marked the shift from a net gas exporter to an importer. With Israeli flows now inconsistent, Egypt is entering a new era of dependence on LNG.
“The LNG import bill will weigh heavily on the state budget, costing between $1.5 billion and $2 billion per month,” said Hafez El-Salmawy, former head of the Egyptian Electric Utility and Consumer Protection Regulatory Agency. “It would have been better to invest this money in exploration and field development,” he told Al Manassa.
Given the current low domestic production, El-Salmawy described regasification as a “necessary evil” to avoid power plant shutdowns during the summer.
In a previous report, two sources told Al Manassa that about one-third of Egypt’s power plants rely on imported gas, raising the risk of blackouts if shipments are disrupted.
“Traditional power plants now consume about 61% of the available market gas,” El-Salmawy added. “That means chartering regasification vessels and securing LNG shipments are the only options left to meet the Ministry of Electricity’s needs.”
A costly but unavoidable solution
Although LNG imports are expensive, they help Egypt avoid potential export losses in energy-intensive industries, said petroleum expert Ramadan Abu El-Ella. Diverting gas to household use at the expense of heavy industry can lead to supply cuts, he explained, which in turn reduces exports of products like fertilizers.
Last month, Abu Qir Fertilizers and Chemical Industries Co., which exports to more than 31 countries, revealed that it had cut its gas intake for two weeks.
“The cost of imported gas now averages $12 per million British thermal units,” Abu El-Ella said. “But it’s the only way to keep chemical and fertilizer exports flowing.”
Since taking office in 2024, Minister of Petroleum and Mineral Resources Karim Badawi has repeatedly emphasized plans to boost domestic production, most recently promising that the decline in oil and gas output would be halted within two months.
Experts warn that increasing local production is now critical to reduce import costs.
Petroleum expert Medhat Youssef told Al Manassa that the current crisis is due to both falling Israeli gas flows and domestic output, which has dropped to below 4.5 billion cubic feet per day.
A senior oil and gas exploration official at the ministry, who requested anonymity, said oil production has declined by about 10% since 2022, while gas output has fallen by 22-26% due to slow development of deepwater fields in the Mediterranean and Gulf of Suez.
“Rising domestic consumption in 2025, up 14% from last year, has added to the strain,” the source added.
The expected monthly LNG import bill for the first quarter of 2025 is around $1.9 billion, the source said.
They stressed the need to expand exploration and development, through new bidding rounds, to boost gas output and offset declines in existing fields. Egypt relies heavily on these fields to meet the majority of its electricity, industrial, and commercial needs.
