Egypt to make its biggest purchase of LNG to avoid shortages during extreme summer heat

Egypt plans to make its biggest purchase of liquefied natural gas in years as it steps up efforts to ease energy shortages amid extreme summer heat and taps market for LNG to ease impact of extreme summer heat، while state-run Egyptian Natural Gas Holding Co.، EGAS، is asking the market for at least 17 shipments of the super-chilled fuel for delivery over the next three months، according to traders with knowledge of the tender.

Egypt taps market for LNG to be able to alleviate impact of extreme summer heat but the purchase may further tighten the global LNG market، as supply outages and hot weather across the Northern Hemisphere boost demand for the fuel used for cooling in summer. 

Egypt  had largely stopped importing the fuel in 2018

Egypt، which had largely stopped importing the fuel in 2018، mulls LNG imports to svoid shortages during summer heat and is returning to overseas purchases this year to help alleviate the strain on its power and gas networks. 

Egypt taps market for LNG as it has already implemented rolling blackouts، idling several petrochemical and fertilizer plants، as hot weather gripped the North African country from April and Egypt، in another summer of massive rolling outages، would pile pressure on the state budget and a population already grappling with high inflation، a devalued currency and rising domestic fuel prices.

  
Egypt plans to make its biggest purchase of liquefied natural gas

Egypt plans to make its biggest purchase of liquefied natural gas and began purchases in recent months via Jordan، because a floating terminal it rented in May for direct deliveries will only be installed in June as that floating terminal Hoegh Galleon has now approached Ain Sokhna، on the Red Sea coast، according to ship-tracking data on Bloomberg and it will remain there for 19 to 20 months.

Egypt is looking at buying liquefied natural gas to stave off fuel shortages this summer، but violence in the Red Sea region is posing a challenge and in the latest tender، Egyptian Natural Gas Holding Co.، EGAS، is seeking shipments via both Ain Sokhna and Jordan، according to traders. 

Egypt has inquired about LNG for delivery as early as next month

Egypt has inquired about LNG for delivery as early as next month and through the summer، according to people with knowledge of the matter snd it would be routed through an existing facility in Jordan، although Egypt is seeking its own floating terminal، they said، declining to be identified because the plans haven’t been made public.

The move would be a huge shift for Egypt، which largely stopped importing LNG in 2018، when the massive Zohr field boosted domestic production، turning the country into an exporter of the fuel but risks from climate change have now upended that scenario، just as geopolitical tensions make it harder to import supplies.

Egypt uses gas for cooling to escape extreme heat  

Egypt،  which uses gas for cooling to escape extreme heat،  wants to secure LNG to avoid the chronic power outages of last summer when temperatures over 35C (95F) caused power interruptions for an hour or two per day as last year was the hottest on record، and experts are predicting 2024 could be even worse.

The country halted LNG exports during the hottest months last year، while those shipments resumed this past winter، they have lagged typical levels for the season، ship-tracking data compiled by Bloomberg show، besides use in power، Egypt needs gas to feed energy-intensive industries such as fertilizer producers. 

Egypt has imported just four cargoes since 2019 

Energy Minister Tarek el-Molla said in October that exports would continue until March or April before using the fuel domestically during the summer، however، the country has imported just four cargoes since 2019، ship-tracking data show. 

The floating storage and regasification unit BW Singapore left Egypt’s Ain Sukhna import terminal in November after a charter deal ended، leaving the nation without an asset that ensures security of supply and last June، Egypt signed a deal with Jordan to jointly use an existing floating LNG import facility in Aqaba، in case of emergency. 

Resuming LNG imports could prove difficult for Egypt

Resuming imports could prove difficult for Egypt، however، as shippers have avoided the Red Sea،  and by extension، the Suez Canal، for months following Houthi militant attacks on vessels and US-led strikes that have so far done little to bring peace to the region.

As a result، most ships have been traveling longer routes around Africa، adding days and freight costs onto journeys، while insurance premiums for venturing into the Red Sea have soared and Egypt has already lost out on revenues from Suez Canal fees as well as renewing LNG imports would be an additional cost just as the nation has secured more than $50 billion in international aid due to a broader economic crisis.

Global warming is a particularly severe problem for Egypt

Global warming is a particularly severe problem for Egypt، a desert country heating up at one of the world’s fastest rates while the planet has now seen 12 consecutive months of record-breaking heat، and experts at the Egyptian Meteorological Authority worry this summer will be even more brutal than last year، upending commodities and agriculture while wreaking havoc on daily life. 

Meanwhile، perpetual power cuts are sharply denting productivity. Laptops shut down during Zoom meetings. When cuts are announced in advance، office goers rush home early to avoid getting stuck in elevators — which local media reports say has caused at least a handful of deadly accidents with people trying to get out during sudden electricity outages in Egypt.

Egypt ،to end blackouts، would require an additional $300 million a month to import enough energy

In Egypt، another summer of massive rolling outages would pile pressure on the state budget and on a population already grappling with high inflation، a devalued currency and rising domestic fuel prices and the country only recently secured the bailout in the form of investments and aid packages، while  Finance Minister Mohamed Maait revealed that state subsidies on fuel amounted to 220 billion Egyptian pounds ($4.6 billion) in the current fiscal year and ending blackouts would require an additional $300 million a month to import enough energy. 

Egypt’s suffering is particularly acute because of its geographical makeup as a desert country with limited water resources، which is making it warm up at twice the rate as the rest of the planet، showing the impact of extreme heat and highlighting the importance of accurately predicting extreme weather events for policymaking and business as economists and climate specialists are forecasting severe heat this summer in many parts of the world.