Egypt buys LNG from Shell and TotalEnergies for $3 billion

Egypt has signed agreements worth almost $3 billion with energy groups Shell and TotalEnergies to guarantee the supply of 60 cargoes of liquefied natural gas (LNG) for the year 2025, according to business sources quoted by Reuters.

Once an exporter, Egypt once again became a net importer of natural gas in 2024, abandoning its ambition to supply Europe because of a significant drop in its domestic production. According to the Joint Organisations Data Initiative, domestic gas production reached its lowest level for seven years in September 2024, mainly due to reduced output from the Zohr gas field and increased electricity consumption.

The 60 cargoes secured under the new agreements should cover most of Egypt's demand by 2025, the sources said, speaking on condition of anonymity.

Egypt is currently trying to reduce its dependence on purchases on the spot market, where costs are higher. Last November, Reuters reported that the country was in talks with US and foreign companies to negotiate long-term LNG supply agreements.

During the summer months, when energy consumption rises due to air conditioning, Egypt has had to buy LNG cargoes on the spot market, often at a higher cost. By 2025, LNG prices on this market had risen to an average of more than $14 per million British thermal units (mmBtu), compared with around $12/mmBtu when Cairo first launched its tenders.

In January, Egypt launched a tender for four LNG cargoes to be delivered between February and March. Another tender could be organised later in the year, depending on demand, market conditions and prices, according to one source.

According to consultancy firm Energy Aspects, domestic gas production could fall by a further 22.5% by 2028, while electricity consumption is set to jump by 39% over the next decade. This growing pressure on energy supplies could lead Egypt to further strengthen its partnerships with international suppliers and diversify its import sources to guarantee its energy security.