Egypt is seeking to purchase large quantities of liquefied natural gas (LNG) on global markets this summer with deferred payments of up to six months.
This strategy, according to market sources, could limit the number of suppliers and increase premiums due to strong competitive demand in Asia.
Return to import
In recent years, Egypt has attempted to position itself as a reliable LNG exporter to Europe. However, dwindling natural gas supplies forced it to return to the import market.
According to business sources cited by Reuters, the Egyptian Natural Gas Holding Company (EGAS) is seeking to purchase 17 cargoes of LNG through a tender ending June 26. Delivery is scheduled for 7 cargoes in July, 6 in August and 4 in September, with FOB (Free On Board) delivery terms to the port of destination.
Costs and payment terms
To secure the necessary volumes, Egypt may have to pay a premium of $1-$2 per million British thermal units (MMBtu) above the Dutch TTF hub reference price. One person said: “Any longer term payment terms will warrant an additional premium. »
Data from Standard & Poor’s indicates that Egypt has already paid a premium of $1.3 to $1.7 per MMBtu on cargoes purchased earlier this year.
Receiving capabilities
The sources expect that the floating regasification and storage terminal of Australian company Höegh Galleon, which arrived at the Red Sea port of Ain Sokhna last week, will handle 12 of the expected cargoes, while the remaining 5 will be received at port of Aqaba in Jordan.
Economic context
Several traders are carefully examining the tender, considered the most important for Egypt in years. The country’s difficult economic situation and credit risks pose challenges.
Two other sources at major oil and gas companies told Reuters that Egypt’s economic challenges and foreign exchange shortages have led to billions of dollars in payment arrears to major companies.
The Egyptian government’s recent resumption of payments on some of these arrears shows a desire to address these delays, although the situation remains tense.
Egypt is thus navigating a complex period, seeking to balance its immediate energy needs with the difficult economic realities and competitive dynamics of the global LNG market.
