Egypt may stop LNG tenders as it prepares for exports next year
Egypt may have just issued its last LNG tender, setting the stage to resume exports in 2019.
Imports of liquefied natural gas may stop in the fourth quarter of this year, allowing for exports to start early next year as Eni’s Zohr and other gasfields increase production and help to draw more foreign investment, said Energy Minister Tarek El Molla.
The final LNG import tender was issued to cover third quarter domestic requirements, and the fourth quarter should be “imports-free”, he said.
“I don’t think there will be more tenders beyond this, I think this is it,” Mr El Molla said on Saturday. “Local production should cover our needs.”
Egypt has to import liquefied gas at high costs, with traders from Glencore to Trafigura Group winning tenders in past years. However, Eni’s discovery of Zohr in August 2015 has the potential to satisfy much of the nation’s demand and may even give it a surplus of supplies.
The giant Zohr field will increase gas production to 1.7 billion cubic feet per day by August from 1.2 billion cfd, the energy minister said. Egypt’s total output is 6 billion cfd, and that should increase to 6.5 billion by September, he said.
Once it has a sufficient surplus, Egypt will start compensating companies that have rights to operate the country’s LNG export terminals, including Royal Dutch Shell and Union Fenosa, Mr El Molla said.
Egypt expects to attract $10 billion (Dh36.73bn) both this year and next year in foreign investment in its oil and gas industry.
“The first thing we will do once we have a surplus, we will supply our partners with some of those quantities,” he said. “So many years have been passing without them getting the quantities they were supposed to receive, so this is one of our priorities once we have a surplus.”
The country has also adopted a flexible gas-pricing formula to encourage investment and boost supply, Mr El Molla said.
Egypt previously paid a fixed price of $2.65 per thousand cubic feet, and the price now is in the range of $3 to $5.88, he said.
A regulatory authority was set up about two months ago and is now working on setting up a tariff system for private companies to use the state’s gas infrastructure and to license them to trade gas, he said.