Getting ready for a hot summer: Egypt research trip key takeaways

Earlier this month we visited Cairo to meet with oil and gas companies, government and key stakeholders in Egypt’s upstream sector. Investor sentiment is downbeat due to the arrears owed to foreign companies. Little headway has been made paying down the backlog which totals around US$6 billion. Predictable, regular payments for contractors remains elusive. Gas production continues to decline, even more steeply than we anticipated. Development wells at Zohr and West Nile Delta will arrest decline rates, but not materially. Despite some incremental developments underway or close to Final Investment Decision (FID), there are insufficient material developments to address Egypt’s structural gas deficit. LNG imports are the best way to keep the lights on in Cairo. Egypt is gearing up for summer with four Floating Storage and Regas Units (FSRUs) chartered. Reducing the country’s reliance on the spot LNG market through longer term contracts, is now firmly on EGAS’s agenda.