Egypt in talks with energy majors for multi-year LNG supply deal, sources say

• Egypt's monthly natural gas production has fallen to 4.4 billion cubic feet per day in fiscal year 2025-26 and is expected to decline further to 4.2 billion cubic feet per day in the current fiscal year
• The proposed multi-year LNG deals could cost Egypt between $8 billion and $11 billion annually, based on recent pricing at approximately $1.5 above the European TTF benchmark
• Egypt's total gas imports are projected to increase from 985 billion cubic feet (July 2025-June 2026) to 1,081 billion cubic feet (July 2026-June 2027), reflecting continued production shortfalls despite efforts to clear foreign companies' arrears

Egypt in Talks for Major Multi-Year LNG Supply Deal

Key Details

Egypt is negotiating with major energy companies including Shell, TotalEnergies, BP, and commodities trader Hartree Partners to purchase 15-18 LNG cargoes monthly for at least three years, with potential deal durations extending to five years.

Financial Impact

The proposed agreements could cost Egypt $8-11 billion annually, based on recent deals priced at approximately $1.50 premium above the TTF European gas benchmark. This represents a significant burden for a nation already struggling with high debt levels that consume most of its budget.

Egypt's natural gas import costs have nearly tripled from $560 million pre-conflict to $1.65 billion in March for unchanged volumes, reflecting the impact of regional tensions and disrupted shipping routes.

Production Challenges

Egypt's domestic natural gas production continues declining despite government pledges. Monthly production averaged below 4.4 billion cubic feet per day in fiscal year 2025-26 and is projected to fall further to 4.2 billion cubic feet per day in the current fiscal year.

Total gas imports reached 985 billion cubic feet between July 2025-June 2026 and are estimated to increase to 1,081 billion cubic feet for July 2026-June 2027.

Market Implications

The multi-year supply agreements aim to reduce Egypt's exposure to volatile spot markets amid geopolitical uncertainty, including regional conflicts and U.S.-Iran tensions. However, escalating energy import costs drain resources from budget spending, investment, and reserve accumulation, compounding economic pressures on the most populous Arab nation. The deals reflect broader challenges in global LNG markets, which remain tight due to ongoing regional conflicts affecting shipping routes.