Egypt’s EGAS agrees second FSRU

Egyptian Natural Gas Holding Company (EGAS) signed an agreement last week with US-based New Fortress Energy (NFE) to lease a second FSRU.

This agreement reflects Egypt’s Ministry of Petroleum and Mineral Resources’ commitment to meeting the growing domestic demand for natural gas, especially during peak summer periods, and aligns with directives to ensure stable electricity supplies from natural gas, EGAS said.

The second FSRU is fitted with updated technology and has an LNG storage capacity of 160,000 cu m and a regasification capacity of up to 750 mill cu ft per day.

The unit will be stationed at Ain Sokhna’s SUMED facility, with operations due to start in the second half of 2025.

This comes at a time when Egypt has been buying fuel oil to meet domestic demand requirements, due to high gas and LNG prices, compared to alternative fuels.

Although Egypt tendered for 20 LNG cargoes for the fourth quarter of this year and was expected to tender 15 to 20 cargoes for 1Q25, according to S&P Global Commodities at Sea, around 11 cargoes have been delivered to the country thus far.

In 2024 thus far, Egypt has imported 2.19 mill tonnes of LNG in 32 cargoes, with 20 cargoes arriving in 3Q24 alone.

Egypt was expected to procure a spot cargo on 6th December, followed by two more for December - one on 14th December and one on 22nd December - according to Commodity Insights data.

Traders said that some cargoes could be cancelled.

All three cargoes were due to arrive from the US, with the total volume amounting to 220,000 tonnes.

Lower residential and commercial demand - for cooling - over winter, coupled with lower demand from domestic industries, such as fertiliser and petrochemical plants, has led to Egypt not requiring as many LNG cargoes, traders added.

Mehrun Etebari , Commodity?Insights Director, said that gas demand had previously been kept in check by increased gas-to-oil substitution for power generation in late 2021 and early 2023, when spot prices for LNG soared above fuel oil prices.

With weaker domestic gas production, Egypt increased the use of fuel oil in power generation to conserve gas for LNG exports,?Etebari added.

However, the evaporation of LNG spot price premiums over fuel oil in early 2023 led to a decline in exports.?