Egypt has secured long-term liquefied natural gas (LNG) agreements valued at approximately $3 billion with Shell and TotalEnergies. These deals, confirmed Reuters, guarantee 60 LNG cargoes to meet the country’s energy requirements in 2025.
Securing LNG Supply for 2025
The new agreements mark a significant shift in Egypt’s energy strategy. To ensure a steady supply of LNG, the deals are designed to cover the nation’s demand for the upcoming year. This comes as Egypt transitions from a position of self-sufficiency to becoming a net importer of natural gas, a change driven by a sharp decline in domestic production over recent years.
Shifting from Supplier to Importer
Historically, Egypt has had ambitions to supply natural gas to other regions, including Europe. However, falling local production has forced the country to reverse its stance. Last year, Egypt emerged as a net importer, relying on multiple LNG cargoes rather than exporting surplus gas. This realignment is part of a broader effort to secure affordable energy amidst domestic challenges.
Tackling the Spot Market Premium
In the past, especially during the hot summer months when air-conditioning needs peak, Egypt has turned to the spot market to source LNG. These spot purchases typically come with an additional premium of about $1 to $2 per million British thermal units (mmBtu). Recent market conditions have further compounded financial pressures on Egypt, with spot LNG prices climbing from roughly $12/mmBtu to over $14/mmBtu in 2025.
Recent Tender Activity and Future Plans
Earlier in January, Egyptian authorities issued a tender for four LNG cargoes scheduled for delivery between February and March. Depending on evolving demand and market pricing, additional tenders may be launched later this year. The proactive tendering strategy is aimed at mitigating reliance on the expensive spot market and ensuring energy security during periods of peak demand.
Domestic Energy Outlook
The challenges facing Egypt’s domestic energy production are significant. Data from consultancy Energy Aspects indicates that local gas output is projected to decline by an additional 22.5% by the end of 2028. Meanwhile, analysts forecast a 39% surge in power consumption over the next decade. These trends underscore the importance of the new LNG agreements, which are expected to play a crucial role in bridging the supply gap as domestic production wanes.
Egypt’s recent $3 billion LNG deals with Shell and TotalEnergies represent a strategic response to declining domestic gas production and rising demand. By securing long-term LNG cargoes, Egypt aims to stabilize its energy supply, reduce dependence on costly spot market purchases, and address the challenges of a rapidly growing power sector all while navigating financial pressures amid a tightening foreign currency situation.
