Egypt, the most populous Arab country, is seeking about 120
LNG (liquefied natural gas) cargoes for 2017, worth about $2.4 billion at
current spot prices in Singapore. But this giant tender is done under the
shadow of the discovery of a huge natural gas field in the Mediterranean would
provide massive supply of feedstock to Egypt in the near future. The Zohr
natural gas prospect discovered in 2015 could hold a potential 30 trillion
cubic feet of natural gas; the field is located in the in Mediterranean Sea
about 190km off the Egyptian coast and is the country’s energy sector's crown
jewel. Egypt hopes to become the center of regional natural gas development. However,
Egypt’s new gas discovery will not cover energy needs in the next four years,
as the preparation of the new gas discovery’s full infrastructure may take five
to six years.
Natural gas has become a vital resource for the Egyptian economy.
Electricity consumption amounted to 62 per cent of the domestic production of
gas, while the industrial sector consumption reached 23 per cent, homes and car
fuel five per cents and oil derivatives 10 per cent. If in the year 2000 gas
provided 35 percent of the total energy needs of the country, now it’s more
than half. But the Zohr project is questioned by the price fundamentals of
natural gas. LNG imports became attractive for nations such as Egypt after
prices fell 61 percent over the past two years. This are enhanced mainly by two
factors. Demand has been reduced by Japan, which had become one of the world’s
largest LNG consumers after its Fukushima disaster, because it recently began
restarting its nuclear reactors. There is an increased supply capacity coming
online around the world that is likely to put further pressure on prices.
In any case, Egypt has chosen three firms to supply
liquefied natural gas to its markets for the remainder of 2016: giant Glencore,
an Anglo-Swiss commodities trading house, will supply cargo for October; Dutch
Trafigura (the third-largest oil and metals trader in the world) will deliver a
shipment for November; and U.K.-based B.B. Energy – a relatively new player in
the LNG trade – will ship in December.
