Egypt’s natural gas production began to decline in 2023, reaching a six-year low.
While daily output in fiscal year 2022-23 averaged around 6.2 billion cubic feet per day (bcf/d), daily consumption hovered around 5.9 bcf/d. This narrow surplus enabled the Ministry of Petroleum to sustain liquefied natural gas (LNG) exports from late 2021 through 2023. Export revenues peaked at $8.4 billion in 2022, driven by high global prices and strong European demand.
Exploration and drilling activities remained robust throughout this period, driven by ongoing partnerships with international explorers such as Italy’s Eni and the UK’s BP, alongside the entry of new players including Chevron, Shell, and Energean. While these companies secured blocks with confirmed geological potential, most results were modest when compared to the large-scale commercial success seen in the Zohr and Temsah fields.
Although gas supply was relatively abundant, the allocation between different needs often lacked a clear economic prioritisation strategy. Exporting LNG remains highly lucrative, with the price per million British thermal units (MMBtu) ranging from $13 to $15. Revenues from LNG exports reached approximately $9 billion in 2022 and $7 billion in 2023.
The government also maintained its commitment to expanding household gas access and allocated a sustainable quantity of production to the expansion of household gas connections. By mid-2025, the number of connected residential units reached 15.6 million, including nine million new connections made between 2016 and 2025.
Electricity generation, a cornerstone of national security and industrial development, remains the largest consumer of natural gas, accounting for three to 3.3 billion cubic feet per day.
Securing the demand of the above-mentioned sectors has constrained the availability of gas for industries which highly depend on natural gas not only as a fuel but also as a feedstock, particularly the fertiliser sector.
Fertilisers rank among the most strategic commodities in the Egyptian economy, not only due to their direct impact on domestic markets and agricultural expansion policies, but also because of their role in safeguarding farmers’ livelihoods and supporting the broader agricultural sector. More importantly, fertilisers have become essential export goods, generating hard currency and contributing directly to the national treasury.
Egypt produces 17.5 million tons of fertilisers annually, of which 12 million serve the domestic market and 5.5 million are exported, generating export revenues of about $3.4 billion. Nitrogen-based fertilisers, in particular, are gas-intensive, with natural gas accounting for nearly 90 per cent of the production process. The chemical reaction involves methane-derived hydrogen combining with nitrogen extracted from the air at high temperatures to produce ammonia nitrates and urea.
Following fertilisers, the petrochemicals sector is another sector that is dependent on gas and also plays a vital role in attracting foreign currency. Using locally produced natural gas as a feedstock, the sector achieves added value ranging from $15 to $17 per MMBtu. In recent years, Egypt exported nearly four million tons of petrochemical products, generating revenues of about $1.6 billion.
In the light of current levels of production (around 4.5 bcf/d) and imports (approximately 1.5 bcf/d), there is a pressing need to adopt a priority-based allocation policy. This means ensuring that electricity generation remains at the top of the energy hierarchy. Furthermore, the dynamics of the gas supply call for redirecting gas away from energy-intensive industries (like steel and cement) and replacing it with direct electric power where feasible.
Slowing down the expansion of household gas connections to ease supply pressure, the government should instead continue the current butane imports, which amount to around 1.6 million tons annually.
Such a strategy would ensure continued support for fertilisers and petrochemicals production, industries that bring in valuable foreign exchange, provided they purchase gas at competitive global market rates. Aligning local industrial gas pricing with international benchmarks would also help reduce the state’s import bill, especially for LNG, which includes regasification and pipeline distribution costs.
Egypt cannot depend indefinitely on gas surpluses. A priority-based policy is now essential. In the longer term, transitioning to alternative solutions such as green hydrogen via electrolysis to replace natural gas in fertiliser production will be necessary. Abu Qir Fertilisers is already in a pilot phase to implement such a process.
These policy shifts, though gradual, could yield economic gains and build resilience for the future.
The writer is professor of petroleum and energy engineering.
* A version of this article appears in print in the 24 July, 2025 edition of Al-Ahram Weekly
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