Egypt’s $3 billion LNG deals can be strategic lifeline or a temporary fix

Egypt has secured liquefied natural gas (LNG) deals worth approximately $3 billion with Shell and TotalEnergies, ensuring the delivery of 60 cargoes to meet domestic energy needs in 2025. While this agreement provides immediate relief for the country’s energy shortfall, it also raises critical questions about the sustainability of Egypt’s energy policies and its long-term economic stability.

From exporter to importer: what went wrong?

Just a few years ago, Egypt had ambitions of becoming a key LNG supplier to Europe. However, a sharp decline in domestic gas production forced the country to reverse course and re-enter the import market. The steep drop in output from the Zohr gas field—once seen as a game-changer for Egypt’s energy independence—along with rising domestic power consumption, contributed significantly to this shift. In September 2024, Egypt’s natural gas production hit a seven-year low, signaling deeper structural challenges within the sector.

The economic strain of LNG imports

Egypt’s growing reliance on imported LNG comes at a time of economic fragility. The country is already grappling with a foreign currency shortage, and purchasing LNG on the international market adds to the financial burden. Spot market prices for LNG have risen sharply in 2025, averaging over $14 per million British thermal units (mmBtu), compared to around $12/mmBtu when Egypt began issuing tenders for LNG supplies. With energy being a critical component of industrial and household consumption, these rising costs could have broader inflationary effects.

Can these LNG deals provide a long-term solution?

While the agreements with Shell and TotalEnergies provide a much-needed buffer against immediate supply shortages, they do not address the root causes of Egypt’s energy predicament. Analysts project that domestic gas production will decline by another 22.5% by 2028, while power consumption is expected to rise by 39% over the next decade. If these forecasts hold, Egypt could face even greater energy deficits in the future, making reliance on costly imports an unsustainable path.

The road ahead: what are Egypt's alternatives?

To reduce its dependence on LNG imports, Egypt must explore alternative strategies. Investing in renewable energy sources such as solar and wind could provide a more sustainable and cost-effective solution in the long run. Additionally, modernizing domestic gas infrastructure and enhancing energy efficiency measures could help mitigate supply-demand imbalances.

Another potential solution lies in renegotiating long-term LNG contracts with more favorable terms to avoid the volatility of the spot market. Strengthening regional energy cooperation, particularly with gas-rich neighbors, could also provide a more stable and cost-efficient energy supply.

Conclusion

Egypt’s $3 billion LNG deals may offer a temporary fix to its immediate energy challenges, but they also highlight deeper vulnerabilities in the country’s energy strategy. Without significant policy shifts and investments in alternative energy sources, Egypt risks becoming permanently dependent on costly LNG imports, further straining its economy. The coming years will be critical in determining whether these deals are a stepping stone to energy stability or merely a band-aid solution for an escalating crisis.