Egypt to cut down on LNG imports as production output surges
Rising domestic natural gas production prompted Egypt to start talks with its LNG suppliers to cut down on contracted cargo deliveries.
The Egyptian Natural Gas Holding Company (EGAS) is looking to defer a number of cargoes scheduled for delivery through 2017, Reuters reports citing analysts.
In addition to deferring 2017 cargoes, the company is looking to cancel up to 40 LNG cargoes for delivery in 2018.
Talks on deferring the cargoes are currently ongoing while traders and producers are looking where to divert the cargoes to, analysts say.
The company has already deferred some ten shipments in 2017 already with up to 17 deliveries due by the end of the year.
Egypt that has turned a net importer over the course of 2016, due to falling production, increased domestic consumption and gas shortages, has deployed two FSRUs in Ain Sokhna that serve as the country’s import terminals.
The Höegh Gallant FSRU, provided by Höegh LNG, began operations in April last year, while the FSRU BW Singapore, provided by BW, has been in full operation since October 2015.
The country became a major importer and cutting down on imports could impact global gas prices if the deferred cargoes are not delivered to other markets.
A report by Wood Mackenzie notes that the Egyptian market is set to undergo change over the next five years, as new gas discoveries and production start-ups push the country’s gas market back into surplus.
With BP’s West Nile Delta and Atoll fields and Eni’s massive Zohr find, the North African country will add a cumulative 41 billion cubic meters a year of gas production by 2022, according to WoodMackenzie.
However, the surplus is expected to be seasonal and Reuters cites Anne-Sophie Corbeau, a research fellow at the King Abdullah Petroleum Studies and Research Center as saying that, although the LNG demand could be challenged it will not disappear completely.
(Source: LNG World News)