Egypt.. and the resumption of gas exports
Egypt is trying to regain its position in the gas exporting countries club by increasing its production, which has declined to 4.8 billion cubic feet per day, which has caused it to be unable to meet its consumption needs, especially in the electricity and agriculture sectors, and has been forced to resort to imports. Cairo has already announced the award of a tender to purchase 17 shipments of liquefied natural gas at a premium ranging between $1.6 and $1.9 over the standard price of the Dutch gas trading platform. This is within the framework of Egypt’s need to import quantities estimated by Prime Minister Mostafa Madbouly at about $1.18 billion, to alleviate power outages, which have increased due to successive heat waves. Egypt has been an exporting country for the past five years, so that its gas exports in 2022 amounted to about $8.4 billion, an increase of 140 percent compared to 2021, at a rate of $600 million per month.
Not content with that, Egypt was targeting exports of about $1 billion per month in 2023, but the decline in prices in global markets prevented it from achieving its goal. Against the backdrop of declining local production, it was even forced to increase its imports of Israeli gas by 21.5 percent, year-on-year, to 903 million cubic feet per day during the summer of last year. Since the “dollar gap” and the accumulation of debts were among the most important reasons for the decline in production, Egypt paid last March – as part of an attempt to regain its position among exporting countries – about $1.5 billion in overdue dues to companies. It then paid a similar amount at the end of last June. It confirmed “working to complete the payment of as much as possible before the end of this year.”
At the same time, the government is focusing on increasing its investments in the sector, by drilling 45 wells at a cost of $1.9 billion, of which 10 wells have been drilled, and foreign companies will continue to drill 35 wells. In addition, the Italian company Eni, with its partners, decided to expand its investments in Egypt by adding $7.7 billion, and the British company British Petroleum is drilling 4 new exploratory wells, and the Egyptian government has informed it of its intention to invest $3.5 billion, especially after the influx of investments from international companies as a result of their confidence in the investment climate in the Egyptian economy in general, and the oil and gas sector in particular. It is worth noting that after the signing of the strategic partnership agreement between Egypt and the European Commission, investment deals will be signed for European companies, with a value exceeding 40 billion euros ($42.85 billion). This is in addition to the fact that the Egyptian Sovereign Fund has signed four agreements with an investment cost of up to $33 billion.
Thus, Egypt is investing the surplus “dollar liquidity” that it has accumulated as a result of the influx of Gulf investments, the most important of which is the UAE’s “Ras Al-Hikma” project deal, worth $35 billion.
The International Monetary Fund expected foreign exchange inflows to reach about $107 billion during the fiscal year that ended in June. Egypt was able to pay about $25 billion of its domestic and foreign public debt during the first half of the current year, out of $36.35 billion due for payment during the current year.
According to the Central Bank, the latest estimates include interest payments of $7.51 billion and debt installments of $28.84 billion. However, with the decline in the value of the public debt, the value of interest and installments due next year is expected to fall to $20.38 billion.
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