Egyptian LNG exports remain strong in Q1 on high prices

Egyptian LNG exports remained strong in the first quarter of 2022, with deliveries totaling 2.92 Bcm of gas equivalent, an analysis of S&P Global Commodity Insights data showed April 20.

LNG exports were down slightly on the 3.22 Bcm delivered in the last quarter of 2021, but remained elevated compared with previous years.

Egypt has two LNG export facilities -- the 7.2 million mt/year (9.9 Bcm/year) Shell-operated Idku facility and the smaller Eni-operated 5 million mt/year Damietta plant.

Egyptian Energy Minister Tarek el-Molla said in February that both plants were operating at "full capacity" and making the most of sustained high spot LNG prices.

The S&P Global Platts benchmark JKM price for spot LNG into northeast Asia reached a record high of $84.76/MMBtu in early March, with prices remaining volatile into April amid Russia's invasion of Ukraine.

The JKM averaged $31.22/MMBtu in Q1 and was assessed at $25.36/MMBtu on April 20.

Egypt is relatively exposed to spot LNG prices, so the current price strength is beneficial to the country, whose LNG exports totaled 9.51 Bcm in 2021, according to S&P Global data.

Egypt produced 71 Bcm of gas in 2021, according to the ministry, up by 10 Bcm year on year.

European pivot

Since late 2021, Egyptian LNG exports have been mostly aimed at the Turkish and European markets, with markets in Asia taking significantly less volume.

Turkey took 1.23 Bcm of gas equivalent in Q1 2022, while Europe imported 1 Bcm, between them accounting for 68% of Egyptian LNG exports in the period.

Of the 1 Bcm supplied to Europe, France and Spain both took 0.3 Bcm, while 0.1 Bcm each was imported by the UK, Italy, Greece, and the Netherlands.

In the first three quarters of 2021, markets in Northeast and South Asia took the bulk of Egypt's LNG.

In 2020, Egypt's LNG exports fell to a trickle after prices dropped to sustained lows in Q2 and Q3.

Egypt became an importer of LNG in 2015 to meet a growing supply-demand gap caused by a major slowdown in domestic gas development, having also halted exports.

However, with the discovery of the supergiant Zohr field, Egypt returned to having a gas surplus, with LNG exports resuming from Idku in earnest in late 2018 and from Damietta in February 2021.

Eni deal

Egypt has also been flagged by the European Commission as a supplier that could potentially help reduce Europe's dependence on Russian gas imports.

On April 13, Italy's Eni -- operator of the Damietta LNG facility -- said it had agreed with Egypt's state-owned EGAS to increase Egypt's gas production and supply.

Eni said the agreement aimed to promote Egyptian gas exports to Europe, and specifically to Italy as part of its LNG portfolio.

"This agreement, together with the one signed for the restart of the Damietta liquefaction plant last year, will provide LNG cargoes for overall volumes of up to 3 Bcm in 2022 for Eni LNG portfolio bound to Europe and Italy," it said.

Eni and EGAS said they would increase activities at jointly operated assets and look to "maximize" short-term gas production.

Eni said it would also optimize the exploration campaigns in existing blocks and in newly-acquired acreage in the Nile Delta, Eastern Mediterranean and Western Desert regions.