Egypt has bought 20 cargoes of liquefied natural gas (LNG) via the first tender issued to cover its winter demand since 2018, securing full volumes it was seeking at smaller than expected premiums, according to trading sources.
The most populous Arab country has returned to being a net importer of natural gas this year, buying more than 50 cargoes so far this year and abandoning plans to become a reliable supplier to Europe.
The Egyptian General Petroleum Corporation (EGPC) has closed the tender on Sept. 12. The purchases aim to cover demand for 4Q 2024. EGPC has awarded the tender on a six-month deferred payment basis.
"Despite the geopolitical challenges in the region and market tightness, EGPC received offers from more than 15 major players at very competitive rates that were 30%–40% less than expected market prices," a trading source said.
"Offers were around a $1-plus per million British thermal unit (MMBtu) premium to the TTF, without the financial cost, which is around $0.60/MMBtu...this is far less than market expectation of a premium over $2/MMBtu."
Three other trading sources said Egypt would pay a premium of between $1.70 and $1.90 to the benchmark gas price at the Dutch TTF hub for the cargoes.
The lower than expected premium surprised many market participants, given Egypt’s foreign currency issues, but one trading source said this was partially due to confidence in EGPC and its strong ties with major energy companies.
The deals are for 17 cargoes to be delivered between Oct. 4 and Nov. 29 to Egypt's floating terminal in the Red Sea port of Ain Sukhna and three cargoes to Aqaba port in Jordan.
TotalEnergies, Shell, bp, and commodities traders Glencore and Gunvor won most of the cargoes. Saudi Aramco won a few cargoes, as did smaller commodities trader Hartree.
Domestic output down. Egypt’s domestic gas output fell to a 6-yr low in May and is expected to drop by a further 22.5% by the end of 2028, consultancy Energy Aspects said, with power consumption expected to jump by 39% over the next decade.
Egypt's natural gas balance is expected to tighten further in 2025, with natural gas production expected to continue dropping amid underinvestment, data intelligence firm Kpler said.
"Egypt is expected to require more LNG next year but needs to prioritize securing additional LNG import capacity, particularly if Jordan's FSRU charter is not renewed in 2025," said Kpler's Laura Page.
Saudi Arabia and Libya have financed the purchase of gas cargoes worth at least $200 MM to help Egypt to contend with a deepening energy crisis, sources told Reuters.