Chevron, the operator of Israel’s Tamar offshore gas field, announced the resumption of supplies to Egypt after operations were halted on October 9, 2023, for security reasons.
Egypt relies on gas imports from the Tamar field via the Eastern Mediterranean Gas pipeline to meet any domestic production shortfall and to produce liquefied natural gas (LNG) at its Damietta and Idku plants for export mainly to Europe.
The return to normal operations eases the country’s current natural gas shortage after extreme heat during the summer months and helps address the most immediate downside risk amid the geopolitical events at its border.
However, Moody’s in its Credit Outlook for November 20 says that “we expect Egypt’s LNG export potential to remain constrained with imported gas predominantly diverted toward domestic use rather than re-export in form of LNG, reflecting structural weakening in its domestic energy demand/supply balance.”
Even before Egypt’s gas imports from the Tamar field were suspended, Egypt’s LNG exports had dropped to zero.
Egypt has not exported any LNG since May, a consequence of declining domestic gas production from the Zohr field and soaring domestic demand during the summer months, weakening the energy trade balance at the end of June.
On 14 November, executives of Italy-based energy company ENI S.p.A. confirmed their expectation that Egypt is likely to resume LNG exports in December or January when domestic demand eases during the winter months.
“We expect the domestic demand/supply balance to remain tight unless the decline in domestic production can be reversed or supplies from Israel increase from pre-conflict levels.”
In September, the government announced plans to expand the ENI-operated Zohr gas field, the main source of domestic energy.
The strategy will also include international oil companies drilling 35 new wells in 2024 and 2025 at a projected cost of $1.8 billion while boosting new research and exploration activities.
Additional approved projects include oil and gas exploration in the Mediterranean Sea and an oil exploration west of the Gulf of Suez.
Moody’s said it expects Egypt’s energy demand/supply balance to “remain tight over the next two years and subject to cyclical demand fluctuations until new domestic supplies materialize.
