Egypt Seeks Long-Term LNG Deals Amid Rising European Energy Costs

Egypt is negotiating with U.S. and other foreign companies to secure long-term contracts for liquefied natural gas (LNG), as the country looks to stabilize its energy market and avoid rising costs tied to the volatile spot market. This shift comes as Egypt’s gas production continues to decline, and the country faces growing domestic demand for energy.

The Egyptian Ministry of Petroleum is aiming for contracts that span three to four years, with a flexibility clause to adjust for sudden changes in demand or supply. The goal is to avoid the risk of sudden price hikes and create more predictability in the country’s energy needs. The negotiations follow a significant two-year collaboration between Egypt, the European Union, and Israel, which has already seen Egypt become a key LNG supplier to Europe.

Since 2022, Egypt has shipped 84 LNG cargoes to several European nations, including the Netherlands, Spain, and the UK. However, despite having spare capacity in its liquefaction plants, Egypt faces constraints in ramping up LNG production due to rising domestic energy needs and infrastructure limitations. Egypt’s Petroleum Minister, Tarek El Molla, noted that while there is room for expansion, significant upgrades to the existing plants and the construction of new production chains will take time.

Meanwhile, as Europe braces for the winter, energy prices are soaring, with electricity prices in major European economies reaching the highest levels in 20 months. A significant drop in wind power generation has led to an increased reliance on fossil fuels, like natural gas, to meet demand. The rising costs are threatening European industries and are putting further pressure on economies that are still recovering from the 2022 energy crisis.

With global and domestic energy dynamics shifting rapidly, Egypt’s LNG exports play a crucial role in supporting European energy security. However, the future of Egypt’s LNG capacity expansion will depend on overcoming infrastructure and production challenges in the coming years.