Egypt received only three LNG cargoes during January 2018, the lowest monthly level of cargo deliveries since the country began importing the product in 2015. Egypt’s imports are waning and appear set to cease altogether by the end of 2018, while LNG exports from the Shell-run Idku liquefaction terminal are rising.
Egypt uses two 170,000 m3 floating storage and regasification units, Hoegh Gallant and BW Singapore, moored at the Red Sea port of Ain Sokhna, to effect LNG imports. The state-owned Egyptian Natural Gas Holding Company (EGAS) has both ships on five-year time charters.
Egypt, the Arab world’s most populous nation, was forced to turn to LNG imports when the gas reserves feeding the country’s domestic gas grid and its two LNG export plants, at Idku and Damietta on the Mediterranean coast, were found to have depleted much more quickly than anticipated.
Damietta was commissioned in January 2005 while Idku loaded its first cargo in May 2005. During their peak year of 2008 the two facilities exported an aggregate 10M tonnes of LNG to world markets.
Damietta ceased export shipments in February 2013, citing insufficient quantities of feed gas for its liquefaction train. Idku followed 12 months later, declaring force majeure to its LNG customers due to ongoing diversions of gas supplies to the local market.
With its dwindling gas reserves unable to meet growing domestic demand, Egypt turned to the FSRUs and LNG imports to bridge the gap. Hoegh Gallant went on station at Ain Sokhna in April 2015 and in June 2017 celebrated receipt of its 100th cargo for regasification. BW Singapore joined Hoegh Gallant in the port in October 2015 and recorded its 100th inbound cargo in July 2017.
In 2016, the peak year for Egyptian imports, the two FSRUs received 7.5M tonnes of LNG by means of ship-to-ship transfers from conventional LNG delivery tankers. There was talk of a third FSRU being required but events rendered that unnecessary.
The latest turnaround in Egypt’s gas fortunes is due to the discovery by Eni in 2015 of the Zohr field, as well as some fresh BP finds. Located off the country’s northern coast, Zohr is the largest gas deposit in the Mediterranean and its 30 trillion cubic feet of gas reserves holds the promise of not only bringing an end to LNG imports and meeting local demand for gas but also supporting a rebound in LNG exports.
Egypt’s LNG imports have been in rapid decline recently, from 11 cargoes/month in summer 2017 to the three in January 2018. The only obstacle standing in the way of the country’s re-emergence as a net LNG exporter over the next few months is another surprise decline in the output potential of the domestic gas fields.