A number of factories have gradually resumed their activity, after announcing on 15 May that they had stopped working, following an interruption that lasted about two weeks as a result of a sudden reduction in natural gas supplies. The factories resumed their activity after the government announced a partial pumping of gas, at a rate ranging between 60% and 70% of the usual quantities, without setting a date for supplies to return to their normal levels.

Major fertiliser and petrochemical factories had announced their complete halt to production, foremost among them “Alexandria Fertilizers”, “KIMA” in Aswan and “Helwan Fertilizers”, while other companies such as “Abu Qir Fertilizers” and “MOPCO” were forced to operate only one production line out of several, which led to a decline in production of up to 30%.

The fertiliser industry in Egypt is one of the largest consumers of natural gas in the industrial sector, as gas makes up about 60% of the cost of producing one tonne of fertiliser, according to official estimates. This sector alone consumes between 35% and 40% of the total gas used in industry.

This large volume of consumption is attributed to the reliance of nitrogen fertiliser factories on natural gas as a basic raw material, in addition to its role as a main source of energy for running industrial processes. Consequently, any disruption in gas supplies directly affects production capacity and the cost of manufacturing, which is reflected in fertiliser prices in the local market and in the cost of agriculture in general.

This is what makes the fertiliser sector one of the sectors most affected by gas crises, which calls for government intervention to guarantee the stability of supplies and to provide gas at prices that ensure the continuity of production and protect the agricultural sector from sharp fluctuations in the cost of its basic inputs.

This crisis comes against the backdrop of a continuous decline in Egypt’s domestic gas production, especially from the “Zohr” field, which is considered the largest gas field in the Eastern Mediterranean. Meanwhile, the quantities of gas imported from Israel have been declining since 21 May, falling to 500 million cubic feet per day, amid growing political tension between Cairo and Tel Aviv against the backdrop of the ongoing Israeli war on the Gaza Strip. Estimates point to a possible further decrease in these quantities of between 15% and 20% during July and August compared with the usual rates.

Previous shutdowns

This was not the first time that factories relying on natural gas had been forced to stop production, as last June saw a similar step by the Ministry of Petroleum and Mineral Resources, which decided at the time to reduce the quantities of gas supplied to fertiliser factories by between 20% and 30%. This reduction caused a number of factories to stop working temporarily, while waiting for sufficient quantities to be secured in order to resume operation.

The fertiliser factories’ decision to stop came in the wake of a similar step taken by the Egyptian Natural Gas Holding Company (EGAS), which cut off gas supplies to petrochemical plants on 21 May 2024, in a measure that lasted 11 days. Later, the Ministry of Petroleum and Mineral Resources announced the start of the gradual resumption of gas pumping to fertiliser factories as of 6 June of the same year.

At the same time, major companies such as “Abu Qir Fertilizers”, “Sidi Kerir” and “KIMA” announced the temporary shutdown of their factories, pending the stabilisation of pressures in the regional gas distribution networks and the completion of the necessary preventive maintenance work before resuming production.

In 2015, with the announcement of the discovery of the giant “Zohr” field in the Eastern Mediterranean, the Egyptian government raised the slogan of “self-sufficiency in natural gas”, considering this discovery a turning point that put Egypt back on the map of energy-exporting countries.

In less than a decade, Egypt suffered a setback in the energy file, with renewed talk of a shortage in domestic gas production, and it slipped back into the category of importing countries once again. Egypt’s natural gas production fell by 16% during 2024, reaching its lowest level in eight years, as it stood at 5.8 billion cubic feet per day in May 2023, compared with 7.2 billion cubic feet per day in September 2021.

Experts believe that this decline is linked to several factors, most notably the natural depletion of the fields’ production and the ageing of wells, in addition to technical problems such as water seeping into some wells, which took them out of service. At the same time, domestic demand for gas rose, especially in the electricity sector, as a result of rising temperatures and increased household and industrial consumption.

In addition, there was the state’s orientation towards exporting large quantities of gas to Europe, which is suffering from an energy crisis because of the war in Ukraine, amid the government’s attempts to secure hard currency in light of an economic crisis that Egypt has been suffering in recent years, which aggravated the natural gas crisis.

In this context, Mohamed Ramadan, an economic researcher at the Egyptian Initiative for Personal Rights (EIPR), believes that the decline in domestic natural gas production in Egypt is a natural issue that can happen over time, but what the government bears responsibility for is the failure to secure gas supplies for some vital sectors, such as cement factories, for which it was necessary to secure gas supplies in different ways.

Ramadan adds, speaking to Zawia3, that Egypt needs to look at the energy file in a broader and more comprehensive way, away from focusing only on gas. Egypt is not a country with huge petroleum resources, as is promoted, and it does not possess sufficient gas reserves to guarantee long-term self-sufficiency. The discovery of the Zohr field is considered one of the achievements that improved the situation temporarily, but it is not enough to cover domestic needs for a period extending over decades.

Ramadan explains that the most appropriate solution should have been to push strongly towards developing renewable energy sources and increasing their share in Egypt’s energy mix, noting that the government has been very late on this file. He also warns that small and medium-sized companies working in the renewable energy sector face many obstacles, such as difficulties in the pricing of connection to the national grid, which limits the ability of this sector to develop and compete.

The economic researcher points out that total reliance on gas in the recently built power plants, whose cost exceeded EUR 6 billion, constitutes a high-risk bet, especially in light of fluctuations in gas production. This reality has recently pushed the government to consider selling some power plants with the aim of easing the financial burden and reducing gas consumption.

Ramadan believes that Egypt’s energy file lacks long-term planning, stressing the need to speed up the transition to renewable energy in a way that allows local companies to transfer technology and develop their capabilities, and not merely to attract foreign investment without achieving a real developmental impact.

Egypt’s natural gas production has gone through varying phases, with production rising in some years and falling in others; it reached its highest levels of natural gas production in the period from 2019 to 2021, before declining again since 2022, according to the 2022 annual statistical report of “British Petroleum” (bp).

According to the report “Developments in Arab and Global LNG Markets in 2024”, issued by the Energy Research Unit, which is based in Washington, Egypt’s imports of liquefied natural gas rose to about 2.8 million tonnes last year, including 300,000 tonnes imported via Jordan, thereby recording the highest level of imports since 2017. Meanwhile, Egypt’s natural gas production continued to decline during 2024, reaching about 4.6 billion cubic feet per day, compared with about 5.5 billion cubic feet per day in 2023.

Withdrawal from the Egyptian market

Four global energy companies recently announced their withdrawal from their concession areas in the Red Sea. These companies include “Shell”, “Chevron”, the Emirati “Mubadala” and “ExxonMobil”. The decision came after the companies evaluated the results of surveys that did not show sufficient indications of economic feasibility to continue exploration operations, despite investments exceeding $326 million since 2019.

The announced reasons for the withdrawal centred on three axes, most notably that the results were economically unfeasible, as the companies reported that the technical data were not satisfactory, which prompted them to re-evaluate their investment priorities. In addition, geological complexities and rising costs, as well as geopolitical tensions in the region, especially in the Red Sea, were among the factors that prompted some companies to reconsider their presence.

In contrast, Egyptian Prime Minister Dr Mostafa Madbouly stressed that the abandonment by some global oil companies of exploration in some areas is a normal matter in line with their priorities, and is not considered a withdrawal from the Egyptian market. He explained that companies conduct preliminary studies to assess discovery opportunities and the extent of economic feasibility, and if the results are not promising, they prefer to redirect their resources to other, more attractive areas.

For his part, economic researcher Mohamed Ramadan believes that the economic crisis may be one of the reasons that affected the management of the gas file, but it is not the only reason. The most important factor lies in the delay in paying the dues of foreign exploration companies, which forces these companies to reduce their investments in exploration and field development, leading to a gradual decline in production. He points out that this scenario has been repeated in Egypt more than once, especially during the gas booms of 2003 and 2005, and was then repeated with the latest boom as well, as these companies use withdrawal as a means of pressure to recover their accumulated dues.

Economics professor Karim El-Omda agrees with Ramadan regarding the position of the withdrawing companies, and believes, speaking to Zawia3, that the current crisis in gas production in Egypt is linked mainly to technical problems in deep-water gas fields, especially the Zohr field, which is considered an unconventional field and uses modern technology, which has made us face natural technical challenges, including over-extraction, which caused the decline in production. He points out that this crisis is not directly linked to economic policies.

Ramadan stresses in his interview that Egypt’s export of natural gas to Europe helped Egypt economically in light of the economic crisis. But excessive exporting put pressure on domestic production.

In 2022, Egypt achieved liquefied natural gas exports amounting to 8 million tonnes, which generated economic returns of about $8.4 billion, an increase of 171% compared with 2021. This rise is mainly due to the increase in global liquefied natural gas prices as a result of the Russian-Ukrainian war, according to statements by Minister of Finance Dr Mohamed Maait.

Egypt searches for alternatives

Amid escalating tensions between Egypt and Israel, Cairo has begun taking serious steps to search for alternatives for the supply of natural gas, with the aim of reducing its dependence on Israeli supplies, which have recently seen a noticeable decline in quantities and a rise in prices. Gas imports from Israel currently make up between 15% and 20% of Egypt’s total domestic consumption, which has prompted the authorities to move towards searching for alternatives to secure new sources of energy.

The alternatives that Egypt is seeking include signing agreements with countries such as Qatar and Cyprus; it has held intensive negotiations with Doha to secure long-term gas supplies, and has also signed an agreement with Cyprus to increase the pumping of offshore gas through the fields shared between the two countries. In addition, Cairo is holding talks with Russia and Turkey to establish terminals for receiving liquefied natural gas, which strengthens its capacity to import gas and meet the needs of the local market.

Egypt is also holding talks with Russia and Turkey to establish terminals for receiving liquefied natural gas, including leasing floating storage and regasification units, to strengthen the country’s capacity to import gas from multiple sources. In addition, Egypt is seeking to boost its domestic production by drilling new wells, deepening existing wells and expanding the exploration area, with the aim of narrowing the gap between production and consumption.

On 15 January 2025, the American company ExxonMobil announced that it had found gas reservoirs in the Nefertari-1 well in the North Marakia area in the western Mediterranean, and the company is still evaluating the results. This discovery comes as part of the intensive drilling work that began in the last quarter of 2024 in the western Mediterranean, where ExxonMobil serves as the main operator of the North Marakia concession with a 60% stake, while “QatarEnergy” holds 40%.

On 20 January, the British company “bp” announced the completion of drilling two wells in the Raven field off the Mediterranean coast, which paves the way for the start of production estimated at 200 million cubic feet per day of natural gas, in addition to 10,000 barrels per day of condensates.

Economic researcher Mohamed Ramadan stresses the importance of diversifying the sources of gas imports and moving away from complete reliance on Israel, praising the Egyptian government’s step towards opening channels to import gas from countries such as Turkey, Qatar and Cyprus, with the aim of securing domestic needs in a safer way.

Regarding the export of Egyptian gas to Europe, Ramadan points out that this decision was justified during the Russian-Ukrainian war, when gas prices were high and the financial need was pressing. But he adds that, with prices currently lower, priority must be given to covering domestic needs and supporting national industry, especially since the value of gas exported as a raw material is much lower than its added value in local manufacturing processes.

Ramadan concludes by saying that the management of the gas and energy file in Egypt needs a more rational vision, focused on achieving a balance between production and domestic consumption, while developing sustainable alternatives, with the aim of reducing reliance on costly imports and achieving long-term energy stability.

For his part, economics professor Karim El-Omda explains that the gas imported from Israel was part of a complex economic system, as it was imported for the purpose of liquefying and reselling it, not for direct domestic consumption. But he points out that the escalation of political tensions and the pressure on Israel led to a reduction in supplies, which further complicated the crisis.

El-Omda adds that Egypt took a decision to reduce gas imports from Israel in order to strengthen its energy independence, while seeking to find alternatives to cover the resulting shortage. Despite the sudden crisis that affected the electricity sector, there are ongoing efforts at present to increase and improve domestic production compared with last year.

Besides the Zohr field, there are several smaller gas fields, including, for example, the “Atoll” field, which holds reserves estimated at about 1.5 trillion cubic feet, and the “Nooros” field, which contains reserves of about two trillion cubic feet. These fields also include the North Alexandria fields, such as Taurus, Libra, Giza, Fayoum and Raven, whose total reserves are estimated at about 5 trillion cubic feet.

In the period between 2018 and 2019, Egypt announced about 15 new natural gas fields, five of which are located in Mediterranean waters. In July 2020, the Italian company “Eni” and “British Petroleum” announced a new discovery in the Mediterranean, about 11 kilometres from the Egyptian coast. Two months later, in September 2020, a new discovery was announced in the Great Nooros area, about 5 kilometres from the Egyptian coast and about 4 kilometres from the Nooros field, which was discovered in 2015. The “Narges” field was also discovered in January 2023.

Editorial correction: The first version of the report stated that the “Narges” field was discovered at the end of last year; the correct information is that its discovery was announced in January 2023, according to the announcement by the Egyptian Ministry of Petroleum and the companies Chevron and Eni.

Editorial correction: The first version of this report said Egypt’s natural gas production reached 4.4 billion cubic feet per day in 2024. The correct figure is about 4.6 billion cubic feet per day (47.5 billion cubic metres), according to the Energy Institute’s 2025 Statistical Review of World Energy.

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