(Bloomberg) -- Egypt’s natural gas production will return to normal levels by June 2025, the prime minister said, just as a recent output slump and rising demand turned the country into an importer of the fuel for the first time in years.
The drop in local supply is a result of foreign oil companies not being able to maintain fields due to arrears owed to them by the government, Egypt’s Prime Minister Mostafa Madbouly said Thursday. About a quarter of the backlog had been cleared by July, Madbouly had said at the time, as government finances improved following a $57 billion bailout led by the United Arab Emirates and the International Monetary Fund.
Gas production declined to the lowest since 2017 in June, which combined with rising demand forced Cairo to increase liquefied natural gas imports to about a six-year high. The country is buying the fuel even for this winter, when consumption is typically lower. Its surprise emergence in the market has the potential to push LNG prices higher just when Europe’s demand picks up with the onset of colder months.
Part of the reason for Egypt’s declining production is lower output at the massive Zohr field in the Mediterranean. It’s not yet clear if the drop is because of technical reasons at fields or a lack of investments, and the prime minister didn’t elaborate on how the companies plan to turn around output. He also didn’t say how much the companies were owed in total.
The government has spent $2.5 billion to secure fuel for power plants over the summer to avert the rolling blackouts, according to Madbouly. The administration in July had said it would end the power cuts that had become common in Egypt as utilities struggled for fuel. The prime minister said Thursday there would be no more rolling outages.
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