Iran War Doubles Egypt’s LNG Bill as Gas Output Keeps Falling

Egypt buys LNG on the international market to cover the gap between domestic supply and gas demand. The war involving Iran has made those imports far more expensive. The article reports that the price of one cargo rose as much as 100% since September, passing $100 million. That price surge doubled what Egypt pays for imported LNG.

The higher prices affect every cargo Egypt purchases. Cairo budgeted $10.1 billion for LNG imports in the fiscal year beginning July 1, but had already spent $5.8 billion by October 6. It set aside about $1 billion for November cargoes alone, showing how quickly costs are rising.

Egypt is responding by postponing deliveries and switching some power plants to fuel oil. It asked suppliers to delay five of 15 November cargoes into 2027. This reduces near-term spending, but it does not solve the underlying shortage. Domestic production fell to 3.63 bcf/d in August, leaving Egypt exposed to volatile international prices.

Liquefied natural gas, or LNG, is natural gas cooled until it becomes a liquid. This greatly reduces its volume, allowing it to be moved in specialized ships and delivered to import terminals. There, it is turned back into gas for pipelines, industry, or power plants. LNG is therefore a transportable form of natural gas.

Egypt needs imported LNG because its own production has been falling since late 2021. Output averaged 4.87 bcf/d in 2024 and about 4 bcf/d in the second half of 2025. In July, Egypt imported more gas than it produced for the first time on record. In August, it imported 2.24 bcf/d as LNG and another 1.20 bcf/d by pipeline from Israel.

The imports help keep Egypt’s energy system supplied while older fields decline. They are also costly. A cargo rose above $100 million, so Egypt is delaying some shipments and burning fuel oil instead. New wells may slow the decline, but they have not yet removed the need for LNG.

Egypt’s gas shortfall is large because domestic production now covers only about half of its reported supply needs. In August, Egypt produced 3.63 billion cubic feet per day, or bcf/d. It imported 3.44 bcf/d, nearly half of what the country consumed. Imports therefore contributed almost as much gas as domestic fields.

The imported total had two parts. LNG supplied 2.24 bcf/d, while pipelines from Israel supplied 1.20 bcf/d. Adding August’s domestic production and imports gives roughly 7.07 bcf/d of available gas. That is an estimate based on the article’s reported flows, rather than a separately stated consumption figure.

The gap has widened as older Egyptian fields lose output. Existing fields decline by about 120 million cubic feet per day each month. New wells and projects may hold production flat in early 2027, but Kpler expects the decline to resume. Egypt therefore remains dependent on expensive imports and alternative fuels.

Force majeure is a contractual protection used when extraordinary circumstances prevent a company from fulfilling an agreement. It can suspend or limit delivery obligations without treating the failure as an ordinary breach. The article does not identify the specific cause behind QatarEnergy’s declaration, but it reports that deliveries to Egypt have remained under force majeure since April.

QatarEnergy extended that status on October 28 through the end of December. Suspended or disrupted deliveries remove gas that Egypt expected to receive under its supply arrangements. Egypt must then find replacement cargoes in an already expensive market, or reduce demand by delaying shipments and changing power-plant fuel.

The effect is especially serious because Egypt’s domestic production is declining. In August, Egypt imported 2.24 bcf/d as LNG and 1.20 bcf/d through pipelines from Israel. Cairo asked suppliers to push five November cargoes into 2027, while Qatar’s extended force majeure leaves uncertainty over deliveries through December. The result is greater price and supply pressure.

Egypt is delaying LNG cargoes to control cash spending during an unusually expensive import period. The price of a single cargo has risen as much as 100% since September, reaching more than $100 million. Paying for every scheduled shipment would put greater pressure on the Petroleum Ministry’s import budget.

Cairo asked suppliers to move five of its 15 November cargoes into 2027. It had already deferred about 15 cargoes since July. Egypt budgeted $10.1 billion for LNG imports in the fiscal year starting July 1, but spent $5.8 billion by October 6. It set aside about $1 billion for November alone.

The main substitute is high-sulfur fuel oil, which power plants can burn instead of gas. EGPC bought six cargoes for November and December, and fuel-oil imports exceeded 640,000 tons in October. This lowers near-term LNG demand, but it shifts the burden to another fuel and does not repair Egypt’s declining gas production.

Egypt’s production is falling because mature fields are declining faster than replacement projects are adding gas. The country’s output averaged 4.87 bcf/d in 2024, an eight-year low, and about 4 bcf/d in the second half of 2025. Existing fields lose about 120 million cubic feet per day each month, according to the reported estimate.

New wells are helping, but their additions are smaller or slower than the losses. Eni’s Nidoco N-2 well began producing about 55 mmcfd in July. BP’s Fayoum-4 reached about 80 mmcfd, while Meleiha Phase 2 is designed for 100 mmcfd. Shell’s Mina West field is expected to add about 120 mmcfd before year-end.

Those projects may hold production flat in early 2027, Kpler says, before decline resumes. Egypt is also pursuing exploration, with 16 wells planned this fiscal year and bids extended to December 14. Discoveries can improve the outlook, but they require drilling, development, processing, and connections before reaching consumers.

An energy supply system connects production to consumption. Gas fields extract fuel from underground reservoirs. Exploration companies search for new reserves and appraisal wells confirm discoveries. Once developed, pipelines carry gas to processing facilities, power plants, or export terminals. LNG terminals receive imported cargoes, turn the liquid back into gas, and send it into the national system.

Egypt illustrates the chain clearly. Chevron’s Nargis-2 appraisal well extended a known reservoir, while Eni, BP, Agiba Petroleum, and Shell brought or planned new production. The ministry says nearby pipelines, processing plants, and export terminals can help discoveries reach the grid faster and at lower cost. Power plants then use gas to generate electricity, or switch to fuel oil when gas is costly or scarce.

The chain is under pressure because older fields are declining. Egypt must import LNG, receive pipeline gas from Israel, and purchase fuel oil. Exploration and new wells could improve supply, but benefits depend on completing development and connecting output to consumers.