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

The war on Iran has doubled what Egypt pays for imported LNG, and Cairo is deferring cargoes into 2027 and burning fuel oil in its power plants to hold down the bill. Egypt’s own output fell to 3.63 bcf/d in August as older fields declined faster than new wells came online, and the petroleum ministry has now extended the deadline for bids on 14 exploration blocks meant to reverse that decline to December 14 after companies asked for more time. QatarEnergy has kept its LNG deliveries under force majeure since April, and on October 28 it extended that to the end of December. A government official told Asharq Bloomberg that the price of a single LNG cargo has risen as much as 100% since September, to more than $100 million.Cairo has asked suppliers to push five of its 15 November LNG cargoes into 2027, on top of about 15 cargoes it had already deferred since July. The Petroleum Ministry budgeted $10.1 billion for LNG imports in the fiscal year that began July 1 and had spent $5.8 billion of it by October 6. Egypt has set aside about $1 billion for November cargoes. To cut the bill, EGPC bought six cargoes of high-sulfur fuel oil for delivery in November and December. Egypt’s fuel oil imports have trended higher since April and exceeded 640,000 tons in October.Egyptian gas output has fallen steadily since late 2021. It averaged 4.87 bcf/d in 2024, then an eight-year low, 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. Imports eased to 3.44 bcf/d in August, still almost half of what the country consumes: 2.24 bcf/d of LNG and 1.20 bcf/d by pipeline from Israel, whose Leviathan partners hold a $35 billion agreement to raise exports to Egypt through 2040. Existing fields lose about 120 mmcfd of output each month, according to the Asharq Bloomberg report. Kpler says new wells and Shell’s (NYSE:SHEL) Mina West field may hold production flat in early 2027 before the decline resumes.Petroleum Minister Karim Badawi pledged on September 16 to add about 330 mmcfd of domestic gas by the end of 2026: about 250 mmcfd from the Zohr and West Mina fields in the Mediterranean and about 80 mmcfd from Meleiha in the Western Desert, which he had due by end-September. Eni’s (NYSE:E) Nidoco N-2 well in the Nile Delta started producing about 55 mmcfd in July. BP (NYSE:BP) brought the Fayoum-4 well online in the West Nile Delta on August 31 at about 80 mmcfd, nearly two years early, by drilling sideways from an existing well. Agiba Petroleum, Eni’s joint venture with EGPC, began start-up of the 100 mmcfd Meleiha Phase 2 plant on October 20, three weeks past Badawi’s deadline. Shell’s Mina West field, at about 120 mmcfd, is due to start before year-end.On October 24, the petroleum ministry announced that Chevron’s (NYSE:CVX) Nargis-2 appraisal well in the Mediterranean had encountered up to 35 metres of net gas pay. The well was drilled to more than 5,000 metres, confirmed an extension of the previously discovered reservoir and found an additional gas-bearing layer. MEES estimated the original Nargis discovery, announced in December 2022, at about 3.5 tcf. Chevron operates the concession with 45%, alongside Eni with 30%, Mubadala Energy with 15% and Tharwa Petroleum with 10%. Mubadala bought its stake from Eni in February. On October 5, Chevron signed for the deepwater Lotus block, committing at least $88 million to two exploration wells in 2,000 to 2,800 metres of water, where no deep exploratory well has been drilled.Egypt made nine discoveries in the fiscal year to June, adding about 2.8 tcf of gas reserves. In July, the petroleum ministry announced a find at the Watda deep well in the Western Desert, which Khalda Petroleum, the joint venture of Apache and EGPC, tested at about 40 mmcfd. The Egyptian Natural Gas Holding Company (EGAS) plans 16 more exploration wells this fiscal year, targeting about 6 tcf.In June, Badawi announced that Egypt had paid off its arrears to foreign oil and gas companies, which had reached about $6.1 billion two years earlier. Those companies have committed more than $19 billion to Egypt over the next three years: $8 billion from Eni, $5 billion from BP, $4 billion from Apache and $2 billion from Arcius Energy.The petroleum ministry opened two bid rounds on August 11, part of its five-year plan to raise output and its goal of oil and gas self-sufficiency by 2030. EGPC is offering six blocks in the Western Desert and the Gulf of Suez, and EGAS eight in the Mediterranean, the Nile Delta and North Sinai. Badawi said many of the blocks sit near producing fields, pipelines, processing plants and export terminals, so new discoveries can reach the grid faster and at lower cost. Bids were due November 11 and December 11 for the two rounds. On November 1, Egypt moved both deadlines to December 14.Egypt has moved its renewables target forward to 2028, from 2030. Egypt had 9.5 GW of renewable capacity in July and plans 11.2 GW by December, with battery storage rising from 500 MWh to 1.2 GWh. Scatec’s 564 MW Obelisk phase two solar plant began commercial operation in August, and Amea Power’s 1 GW Abydos 2 started trial runs in September. In June, Egypt signed a memorandum of understanding with China’s SANY Renewable Energy for the country’s first wind turbine factory and a 2 GW wind farm in the Gulf of Suez. In October, Finance Minister Ahmed Kouchouk said each gigawatt of new solar, wind or nuclear capacity saves Egypt about $250 million in gas imports. Egypt’s oil and gas import bill rose nearly $5 billion to about $35 billion in the fiscal year that ended June 30.By Alex Kimani for Oilprice.comMore Top Reads From Oilprice.comADNOC Gas to Supply LNG to TotalEnergies Under Five-Year DealIndian Refiner BPCL Buys U.S. WTI Crude Oil CargoDubai Benchmark Slips Into Contango for the First Time Since July