How Egypt is managing energy deficit in a sweltering summer?
With daily output declining and demand surging, particularly for electricity generation, energy security has emerged as a critical national concern.
While some reports warn of a looming crisis, new developments suggest Egypt is not passively enduring the pressure. Instead, the government is pursuing a multi-pronged approach: importing liquefied natural gas (LNG), reactivating emergency fuel sources such as mazut, negotiating with key partners like Israel, and accelerating long-term investments in renewable energy and international contracts.
Egypt faces an apparent shortfall in its natural gas balance, with daily production dropping to around 4.5 billion cubic feet, against consumption of approximately 6 billion. This discrepancy places the system under increasing strain, particularly during peak summer demand.
Speaking to Ahram Online, Gamal Al-Qalyoubi, Professor of Petroleum and Energy Engineering, clarified that “the actual rate of gas production decline does not exceed 1.7 billion cubic feet per day,” stressing that the frequently cited 3 billion cubic feet gap is “exaggerated and not an accurate reflection of reality.”
Alternative plans to secure supplies
To address the shortfall, the government activated an emergency plan that includes bringing in three LNG regasification vessels and a ship docked at Aqaba Port, which will be shared alternately between Egypt and Jordan.
However, Medhat Youssef, former Vice President of the Petroleum Authority, believes the crisis is “not fully resolved yet, as the fourth vessel has not arrived, and one ship has not been operating at full capacity, leading to power outages during the heatwave, particularly in rural areas.”
Despite these challenges, the national electricity grid has not collapsed and has largely maintained performance under record loads.
Al-Qalyoubi affirms: “What occurred should not be considered scheduled outages, but rather limited technical failures due to the heatwave,” adding that outages in some areas did not exceed 15 minutes and praising the grid’s ability to handle a daily load of 40,000 megawatts.
Fuel oil returns—at a cost
During periods of peak demand, the government resorts to using fuel oil (mazut) as an alternative for electricity generation.
Youssef notes that this policy is not new: Egypt previously earned around $8.5 billion from gas exports by substituting gas with mazut for domestic use, capitalising on the significant price difference ($50 for exported gas versus $16 for imported mazut).
Official sources report a temporary halt in gas supplies from Israel, attributed to maintenance at the Leviathan and Tamar fields. However, the implications are broader, touching on market balance and trade agreements.
Al-Qalyoubi comments: “The Egyptian market remains the primary strategic partner for Israeli gas, receiving 800 million cubic feet per day, compared to just 250 million for the Jordanian market. Any talk of price changes is technically illogical, since the contracts are binding.”
Youssef, however, believes that “the agreements may grant Israel some flexibility to renegotiate prices if Egypt increases its demand—a natural occurrence in any market.”
Zohr field decline: natural, not technical
The sharp decline in production from the Zohr field is a key factor in the current crisis, with output falling from 3.8 to 1.8 billion cubic feet per day.
Al-Qalyoubi explains: “The decline is due to reduced fertility of geological layers—a natural development in any field’s lifecycle, not a technical failure.” He pointed to intensified exploration efforts in promising areas such as the Red Sea and the western Mediterranean, with major companies like Chevron and ExxonMobil expected to enter in 2025.
Long-term contracts as a strategic hedge
In light of global gas market volatility, Egypt has moved toward signing long-term import contracts with countries including Qatar, Russia, and Algeria. These agreements offer greater security in supply and pricing.
Al-Qalyoubi states: “For the first time, Egypt is adopting this type of contract, which is a highly important step that spares us from emergency tenders and negotiating under pressure.” He adds that flexible financing mechanisms are in place to reduce strain on the national budget.
Youssef commends this approach: “Major countries like China and Japan follow the same model. Extended contracts protect against price fluctuations and enhance market stability.”
Despite the advantages, the state faces real challenges securing liquidity to fund imports, particularly amid rising global interest rates.
Youssef reveals: “The government is currently deferring payment for some shipments. This provides temporary flexibility but increases financial burdens in the long term.”
Renewables: a long-term hope
Egypt plans to expand its renewable energy portfolio, focusing particularly on wind and solar, to reduce its reliance on natural gas for electricity.
Al-Qalyoubi affirms: “The goal is to produce 28,000 megawatts from wind and 11,000 from solar within four years, reserving gas for industrial use instead of burning it for power generation.”
Youssef, however, remains cautious: “Renewables currently account for no more than 10 percent of our needs, while gas covers roughly 90 percent of the power mix. Even after nuclear plants come online, gas will remain the primary source for years to come.”
Transitional strain, not total crisis
Despite the pressure of summer demand and declining production, both experts agree that Egypt is not on the brink of collapse, but is navigating a transitional phase requiring swift exploration, expanded contracts, and precise demand management.
“We are not living through a sudden energy crisis, but a transitional period being managed with realistic plans,” concludes Al-Qalyoubi. Youssef adds: “Energy security can only be achieved through a mix of production, imports, and smart financial hedging.”