Egypt strikes new deal with Israel to increase gas imports by 20 percent

The Egyptian government has struck yet another deal with Israel to increase gas imports - this time by 20 percent - starting from October - to combat Egypt's electricity crisis.

This increase will see Egypt importing 1.2 billion cubic feet per day, up from 850 million cubic feet in July.

The revelation came last weekend when Prime Minister Mostafa Madbouly announced at a press conference that there would be no more power outages as was previously planned, as the government had been able to secure gas and diesel shipments to ensure the stable operation of powerplants over the coming autumn and winter.

Egypt has suffered prolonged blackouts over the summer due to gas shortages and extreme heat, which has left ordinary Egyptians frustrated and has seen Egypt’s liquified natural gas (LNG) exports halted.

Despite Egypt's ambitions in recent years to become a regional energy hub and major exporter of liquified natural gas (LNG), especially in the wake of the discovery of vast gas field Zohr, this has not materialised.

This is in part due to complications relating to underinvestment in Egypt's gas fields, falling production in operational fields, and unpaid dues to drilling companies, leading to them suspending their operations.

Significant gas shortages 

Petroleum economist Gamal al-Qalyubi told The New Arab's Arabic-language sister site Al-Araby Al-Jadeed, that adequate gas provision is vital for the state amid huge shortages reaching 900 million cubic feet per day.

He explained that Egypt needs to secure around three billion cubic feet of gas to generate just the country's electricity needs, as well as a sufficient amount for use by fertilizer and petrochemical factories with international export contracts, in addition to the gas used by other industries, fuel stations and homes.

The government was fearful of losing its international markets if gas shortages continued, he said.

The Egyptian government has managed to secure $200 million in financing for the increase in gas shipments from Saudi Arabia and Libya and is in negotiations with international financing bodies to try to secure around $2 billion.

In 2020, the Dolphinus Holdings company, which is linked to Egypt's General Intelligence Services (GIS) signed a $15 billion gas deal with Israeli company Noble Energy, tying Egypt to two ten-year gas contracts with Israel.

However, Egypt has increased Israeli gas shipments repeatedly due to energy shortages, for instance in September 2023 imports were raised by 30 percent.

The Egyptian government has now agreed with Israel that the daily shipment of Israeli gas should increase by 50 percent to 1.6 billion cubic feet by the end of 2025, following the completion of an extension to the pipeline which connects the two parties' gas networks.

This article is based on an article which appeared in our Arabic edition by Adel Sabri on 23 September 2024. To read the original article click here.