Wood Mackenzie: Egypt’s gas market set to undergo major change
Egypt’s gas market would undergo significant change over the next five years, impacting global LNG market, according to a research by the natural resources consultancy Wood Mackenzie.
After five years of falling gas production and switching from a net exporter to a net importer, the new production capacity coming on stream over the next few years will push the country’s gas market back into surplus.
From being the world’s eight largest LNG exporter in 2009, the country turned to the world’s eight largest LNG importer in 2016, however the market could swing to surplus as soon as 2019.
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 Wood Mackenzie.
The analysis, however, predicts that the surplus will be seasonal.
“Better gas availability will boost domestic consumption in the power sector, peaking in the summer months, while utilisation rates at gas-intensive industries will recover,” Wood Mackenzie said.
This would exacerbate the country’s domestic gas demand seasonality. In the medium-term, LNG imports could still be critical to balance the market in the summer, while Egypt would export surplus volumes during the winter, taking advantage of northern hemisphere winter LNG prices.
The reversal has been driven by the exploration results and higher gas prices. “The Petroleum Ministry’s pragmatic approach to pricing has secured more than US$28 billion in investment in the Egyptian upstream sector since 2015, at a time when other regions saw inward investment fall,” according to Wood Mackenzie.
A second gas boom is expected as the number of high-impact wells are planned for 2017. Depending on the results, Egypt could turn into a regional hub simultaneously importing and exporting liquefied natural gas.
(Source: LNG World News)