Oil & Gas

Egypt is negotiating with major energy companies, including Shell, TotalEnergies, BP, and commodities trader Hartree Partners, to secure between 15 and 18 liquefied natural gas (LNG) cargoes each month under contracts lasting three to five years, according to sources familiar with the discussions. The move is aimed at ensuring a stable long-term gas supply as domestic production continues to fall short of growing demand. While negotiations are ongoing, no agreements have yet been finalized, and the companies involved have either declined to comment or did not immediately respond to requests for comment.

The talks come as Egypt faces mounting pressure from tighter global LNG markets and heightened geopolitical tensions. Disruptions to shipping through the Strait of Hormuz during the Iran conflict have intensified competition among importers seeking reliable fuel supplies. Analysts say Egypt is increasingly looking to reduce its dependence on volatile spot-market purchases by locking in medium-term contracts while also expanding pipeline gas agreements.

The country's energy import bill has surged sharply, placing additional strain on public finances. Egypt's monthly natural gas import costs have nearly tripled—from around $560 million before the regional conflict to approximately $1.65 billion for the same import volumes in March. Based on recent pricing trends, the proposed LNG agreements could cost between $8 billion and $11 billion annually, adding pressure to a government already dealing with high debt levels, a fragile currency, and limited fiscal flexibility.

Egypt's growing reliance on imports reflects the continued decline in domestic natural gas production. The country imported about 985 billion cubic feet of gas between July 2025 and June 2026, with volumes projected to rise to 1,081 billion cubic feet in the following year. Despite government efforts to revive output and settle arrears owed to foreign energy firms, production averaged below 4.4 billion cubic feet per day in fiscal year 2025–26 and is expected to decline further to around 4.2 billion cubic feet per day during the current fiscal year.