Egypt is in troubled waters. The nation is a natural gas exporter, sending gas offshore to markets in China, Chile, and other places. But due to falling production and a restless economy, it could very soon begin importing gas.
Bloomberg reports:
“We are in discussions with many countries in emerging markets about LNG imports at the moment and Egypt is on the list,” [Royal Dutch] Shell Chief Financial Officer Simon Henry said last month. “Egypt’s economy clearly is growing in terms of its demand for energy, and gas is the first fuel.”
After the ousting of former president Hosni Mubarak, Egyptian gas producers like BG Group Plc (LON: BG) have cut down on production. Demand, over the same period, has expanded rapidly from electricity plants.
Egyptian currency could be devalued and the government could be forced to consider slashing fuel subsidies if Egypt begins importing.
Bear in mind that right now, gas-fired power is the trend in Middle Eastern nations. Given Egypt’s tourism and foreign-currency troubles, the nation needs export revenues badly.
Over the 2011-12 fiscal year, Egypt’s natural gas exports rose to $1.96 billion, up by 2.9 percent. After crude and refined oil, that marked Egypt’s biggest exports.
But according to oil minister Osama Kamal, Egypt could begin importing gas in the second half of 2013, with import maximums set at 1 billion cubic feet per day, Bloomberg reports.
Domestic gas consumption went up 10 percent in the past year even as production slumped—something that has been happening in Malaysia and Indonesia as well.
Egypt should expect to cough up $10 per million British thermal units—an annual cost of about $3.65 billion—for imports of 1 billion cubic feet per day.
The country is already courting investors for an LNG import terminal, hoping to get things up and running by May of the new year. Qatar’s QInvest LLC and Citadel Capital SAE are both involved in that project.
