Egypt Scrambles for Affordable Oil and LNG Amid Worsening Energy Crisis

Egypt is grappling with a fresh surge in natural gas shortages just as the summer heat waves push electricity demand to record highs. With temperatures soaring well above 40°C, the pressure on the national grid is intense, forcing the government in Cairo to take urgent steps to prevent blackouts and keep the lights on.

Despite ambitions to become a major LNG exporter to Europe and beyond, Egypt faces a bitter contradiction: struggling to keep up with domestic energy needs while chasing export deals. This energy squeeze exposes deeper production woes and financial limits that risk slowing the country’s energy dreams.

Domestic Demand Soars as Heatwaves Test the Grid

As Egypt heads into the peak of its scorching summer, the strain on electricity is palpable. Air conditioners hum relentlessly in homes and businesses, pushing the demand curve sharply upwards. The national grid, already under stress from years of underinvestment and growing population, now faces its toughest test.

The government’s scramble isn’t just reactive — it’s desperate. Energy officials have rolled out emergency plans, including importing LNG cargoes under deferred payment schemes and bringing back cheaper, dirtier fuel oil to power plants. These moves highlight how fragile the energy balance has become, especially when natural gas production lags.

This summer could well be a turning point. If supply keeps falling short, the risk of rolling blackouts looms large. And the social and economic fallout? It could be severe. Electricity disruptions hit everything — from businesses to hospitals to schools. Egypt’s economic recovery, already teetering, could take a big hit.

Production Struggles at Zohr and Other Gas Fields

Egypt’s energy woes are no accident. The giant Zohr offshore gas field, once hailed as a game-changer for Egypt’s gas ambitions, is now a major headache. Technical difficulties have pushed back expected output. Add to that delays and underperformance from smaller fields, and the country’s domestic supply pipeline looks dangerously thin.

Foreign investment, a crucial lifeline for the sector, is also faltering. Economic uncertainty and political concerns have scared off many potential backers. Without fresh capital and technology, production growth stalls.

Here’s the tough bit: Egypt has to juggle producing enough gas to satisfy local demand, plus supply lucrative export contracts. And lately, the balance sheet is tipping unfavorably toward domestic shortages.

• Technical setbacks at Zohr and other offshore fields

• Delayed and reduced output from newer gas fields

• Shrinking foreign investment amidst economic instability

This trifecta of problems paints a grim picture for Egypt’s near-term gas production outlook.

Cairo Turns to Long-Term LNG Imports From Qatar

With local supplies faltering, Egypt is looking abroad. Talks with Qatar over long-term LNG deals have gained momentum, signaling a shift in strategy. Cairo’s energy minister, Karim Badawi, has been in discussions with Qatar’s Saad bin Sherida Al-Kaabi, pushing to lock down steady LNG flows.

These negotiations come with promises from Egypt to open doors for Qatari investment in its oil and gas sectors. QatarEnergy’s footprint in Egypt could expand, including stakes in offshore Mediterranean blocks and the North El Dabaa field, a move that deepens ties between the two energy heavyweights.

The Qatar deal aims to provide Egypt with a reliable LNG supply cushion, especially as domestic production lags and Israeli gas deliveries face hurdles.

Israeli Gas Supply Delays Add to the Pressure

Speaking of Israel, expectations of a boost in gas imports from its fields have hit a snag. Initially, Egypt was set to receive around 200 million cubic feet per day starting mid-May through an upgraded pipeline connecting Ashdod and Ashkelon to Egypt’s network. But those plans have stalled due to price disagreements.

Israeli suppliers reportedly want better payment terms, and Egypt isn’t budging easily. This delay hurts Egypt’s supply diversification plans and increases reliance on more expensive LNG imports.

The irony? Infrastructure improvements are in place, but political and financial wrangling stalls actual gas flow. It’s a stark reminder that energy isn’t just about pipes and rigs — it’s about deals and diplomacy.

Emergency Measures: LNG Imports and Return to Fuel Oil

As a quick fix, Egypt is ramping up imports of LNG from Europe and the U.S., eyeing about 14 shipments this month alone under deferred payment arrangements. This move is costly and puts pressure on the public purse, which is already stretched thin.

Alongside LNG, Egypt is dusting off an old, controversial solution: fuel oil. The General Petroleum Corporation has issued tenders for millions of tons of fuel oil deliveries, a cheaper but dirtier energy source for power generation.

Fuel oil’s environmental downsides are well-known, but with gas prices climbing and supply shaky, officials see it as a short-term lifeline to keep power plants running.

Table: Egypt’s Estimated Energy Imports and Costs for 2025

Egypt’s financial juggling act involves capping LNG purchase prices while urgently securing enough fuel to avoid power crises. Whether this approach will hold through the brutal summer remains to be seen.