Egypt to Resume LNG Exports By October: Minister

Egypt plans to resume exports of liquefied natural gas in October after increased domestic demand led to a halt in shipments over the summer.

Hot weather means Egypt is consuming all the gas that it’s producing, leaving little for exports, Energy Minister Tarek el-Molla told reporters in Cairo. The return of supplies from the North African country will mean increased availability for key buyers in Europe and Asia ahead of their winter heating season, when demand in those regions increase.

LNG shipments from Egypt’s two production plants typically decline during the hottest months as demand rises at home for power generation. The country didn’t export a single cargo last month, and has dispatched only one shipment so far in July, ship-tracking data on Bloomberg show.

While the minister didn’t mention any production issues, concerns have been raised that gas output is declining amid water infiltration problems at the massive Zohr gas field.

The issues mean Egypt’s gas production is forecast to fall 4 percent this year to a three-year low, according to BMI Research, a Fitch Solutions company that previously estimated growth of 1 percent. That will mean a slip in LNG exports this year.

While the shipment halts point to an increase in summer cooling demand, “it also highlights the trend of declining production at domestic Egyptian gas fields, especially at Zohr,” said Leo Kabouche, an analyst at Energy Aspects Ltd. in London.

Last year, however, was an exception. The country took advantage of higher global gas prices by exporting the superchilled fuel even during the hot months while importing cheaper heavy fuel oil, el-Molla said. The decline in international prices this year makes it more economical to consume the fuel domestically, he said.