A coalition of five Egyptian companies announced on Monday their intention to establish a new firm to import liquid ethane shale gas from the United States.
This move aims to address the ongoing natural gas supply shortages impacting the country’s electricity and industrial sectors.
Sidi Kerir Petrochemicals Company (Sidpec) stated in a stock exchange filing that it plans to import American shale gas through a consortium, pending approval from all involved parties.
Following this approval, the consortium will proceed with the necessary steps to establish the new company within this year.
The consortium includes the Egyptian Petrochemicals Holding Company (ECHEM) with a 15% stake, Sidpec with 25%, the Egyptian Ethylene and Derivatives Company (Ethydco) with 25%, the Egyptian Natural Gas Company (GASCO) with 10%, and Gamma Construction with 25%.
Sidpec disclosed that the new company’s capital would be $663 million, with 40% funded by shareholders and 60% through bank loans.
This development follows the recent shutdown of several Egyptian factories, including those of Sidpec, due to power outages and reduced natural gas supplies amidst soaring temperatures.
Last week, companies such as the Egyptian Chemical Industries Company (KIMA), Misr Fertilizers Production Company (MOPCO), Sidpec, and Abu Qir Fertilizers and Chemicals announced production halts due to disrupted gas supplies. Sidpec later reported resuming operations as gas supplies were restored.
This week, Alexandria Fertilizers, part of the Egyptian Kuwaiti Holding Company, joined the list of companies suspending operations due to gas supply issues. In a stock exchange statement, Alexandria Fertilizers attributed the stoppage to operational issues in the regional gas network and increased consumption due to high temperatures.
Egypt has faced a persistent electricity production crisis since last summer, prompting the Ministry of Petroleum and Mineral Resources to halt liquefied natural gas (LNG) exports starting May 2024.
Officials have attributed the power outages to surging demand driven by a growing population of 106 million and extensive development projects.
Prime Minister Mostafa Madbouly announced last week that Egypt needs to import about $1.18 billion worth of fuel oil and natural gas to mitigate power cuts, to eliminate outages during the remaining summer months. According to commercial sources, Egypt recently awarded a tender to purchase 17 LNG cargoes for summer delivery.
In 2018, Egypt declared self-sufficiency in natural gas, notably after the commencement of production from the Zohr gas field.
Three years later, Egypt exported its first LNG shipment to Europe in eight years. However, daily natural gas production has since declined due to technical issues at Zohr, despite official denials of any problems.
Last year, Egypt’s average natural gas production was about 6.2 billion cubic feet per day, while domestic consumption averaged 5.9 billion cubic feet per day.
The Ministry of Petroleum and Mineral Resources reported that electricity generation accounted for more than half of the country’s natural gas consumption.