Egypt seeks $11B annual LNG deal with Shell, TotalEnergies, BP

Egypt is negotiating multi-year LNG supply contracts with Shell, TotalEnergies and BP as domestic gas production declines and import costs surge.

Egypt is in talks with Shell, TotalEnergies and BP to buy 15 to 18 cargoes of liquefied natural gas per month for at least three years, three trading and industry sources said, as the country's domestic production struggles to keep pace with rising demand.

"Egypt's ongoing negotiations for medium-term LNG supply, alongside the expansion of existing and planned pipeline gas agreements, reflect efforts to reduce exposure to volatile spot market procurement amid continued geopolitical uncertainty," said Aly Blakeway, head of Atlantic LNG at S&P Global Energy.

The deals could cost Egypt between $8 billion and $11 billion annually, based on Reuters calculations of recent contracts priced at a premium of about $1.50 above TTF, the European gas benchmark. Egypt's natural gas import bill nearly tripled to $1.65 billion in March from about $560 million before the Iran conflict, for unchanged volumes.

Every dollar spent on LNG imports is money no longer available for budget spending, investment or reserves accumulation, adding pressure on an economy already grappling with high debt and a currency under strain since the regional conflict began.

Production Decline Drives Import Surge

Egypt imported 985 billion cubic feet of gas between July 2025 and June 2026, including pipeline supplies from Israel and spot LNG cargoes. Imports are projected to reach 1,081 billion cubic feet in the current fiscal year ending June 2027, according to official documents seen by Reuters.

The rising import volumes reflect a continued decline in domestic natural gas production, despite repeated government pledges and the clearing of arrears owed to international oil companies. Monthly production averaged under 4.4 billion cubic feet per day in fiscal year 2025-26 and is expected to fall further to 4.2 billion cubic feet per day in the current fiscal year.

Geopolitical Risk and Supply Competition

The negotiations come as global LNG markets remain tight after the Iran conflict, which has curtailed shipping through the Strait of Hormuz and intensified competition among buyers seeking to secure long-term supplies. Two of the sources said talks are ongoing with Shell, TotalEnergies, BP and commodities trader Hartree Partners, with one source noting "a strong will to work with Americans."

The duration of the contracts could range from three to five years, though terms have yet to be finalized, the sources added. The broader uncertainty also includes the Russia-Ukraine conflict, which has reshaped global gas flows since 2022 and pushed European buyers to diversify away from pipeline supplies.

For Egypt, locking in medium-term LNG supply at a premium to TTF represents a costly but necessary hedge against spot market volatility. The $8 billion to $11 billion annual price tag would add to fiscal strain, with debt servicing already consuming the majority of the government's budget. For the energy majors involved, the deal secures a stable off-take agreement in a region where LNG demand is growing rapidly, reinforcing their pivot toward gas as a core pillar of long-term strategy.

This article is for informational purposes only and does not constitute investment advice.