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Egypt gas project activity collapses amid energy crisis

27 February 2025

 

The total value of active Egyptian gas projects has fallen by 79% despite a steep decline in domestic gas output that has ramped up the need for costly imports.

At the start of 2019, the total value of active gas projects in Egypt was $41.5bn. This has now sunk to $8.6bn, according to data from regional project tracker MEED Projects.

Despite the billions of dollars of investment that has been sunk into upstream projects in Egypt’s gas sector in recent years, production has been dropping after it peaked in 2021, according to the Energy Institute’s Statistical Review of World Energy.

In 2021, Egypt produced 67.8 billion cubic metres (bcm) of gas. This fell to 64.5 bcm in 2022 and 57.1 bcm in 2023.

In May 2024, Egypt’s domestic gas output hit a six-year low, down by about 25% from its 2021 peak.

Declining domestic production has led to a severe energy shortage in Egypt.

Last year, the North African country had to resort to load-shedding to keep its grid functioning amid a lack of gas supply and rising demand, while the deepening energy crisis strained Cairo’s budget as it grappled with a heavy subsidies bill.

In the past 12 months, Gulf countries have had to help Egypt finance liquefied natural gas (LNG) imports worth billions of dollars to try and ease the country’s crisis.

Egypt had planned to become a regional gas hub and a major exporter after Italy’s Eni discovered the Zohr offshore field in 2015.

When Zohr started production in 2017, Egypt’s oil and gas ministry said that the field would produce 2.7 billion cubic feet a day (bcf/d) until 2039, but after rising to a peak at 3.2 bcf/d in 2019 output fell to just 1.9 bcf/d in the first half of 2024.

Production outlook

The collapse in the total value of gas projects in Egypt does not bode well for future domestic gas production – and signals that the country may remain reliant on costly gas imports for some time to come.

In addition, many of Egypt’s biggest active gas projects remain at the study stage with significant uncertainty about when execution will start and new production will be brought online.

A total of $5.1bn of all of Egypt’s active gas projects are currently in the study stage, making up 60% of active gas projects in the country.

Meanwhile, 12% of active gas projects are at the bid evaluation stage and 27% are currently under execution.

Last year, the Egyptian Natural Gas Holding Company launched an international bid round for the exploration and exploitation of natural gas and crude oil across 12 blocks in the Mediterranean and Nile Delta, as part of an initiative to try to boost production.

The 12 blocks were comprised of 10 offshore blocks and two onshore blocks.

While this initiative is promising, it is expected that Egypt’s efforts to attract bidders could be held back by recent problems with prompt payments to international oil companies (IOCs).

The Egyptian General Petroleum Corporation (EGPC) has accrued arrears to IOCs, estimated at $4bn-$5bn. 

These debts have arisen due to a combination of foreign exchange shortages, as well as other structural issues, including declining domestic gas production, rising domestic consumption that limits gas export opportunities, and increased subsidies provided by EGPC to the electricity sector.

While gas project activity has plummeted since the start of 2019, oil project activity has seen a slight uptick, according to MEED Projects.

At the beginning of 2019, the total value of all active oil projects in Egypt was $15.2bn. As of 11 February 2024, this had risen by 15% to $17.6bn.

Economic issues are expected to hamper the development and execution of projects in the oil and gas sectors in 2025.  

Inflation is rising, the Egyptian pound is continuing to lose value and millions of Egyptians are grappling with a cost-of-living crisis.

Inflation stood at 24% in December 2024 and Egypt’s debt-to-GDP ratio remains high, at 89% for the 2023-24 fiscal year.

The low value of the Egyptian pound is likely to cause significant problems to those that want to execute large-scale projects in Egypt’s oil and gas sectors, as it is likely to increase the cost of importing raw materials and equipment.

In December, the European Commission announced a plan to disburse €1bn ($1.05bn) in loans to help Egypt cover part of its financing needs for the fiscal year 2024-25 and “ensure macroeconomic stability”.

Financial support has also been provided by the IMF, the World Bank and the UAE.

However, with Egypt’s perilous economic situation hampering project development and a failure to execute strategic projects constraining economic growth, it is possible that the North African country will be reliant on significant assistance from its foreign partners for energy imports for some time to come.

MEED’s March 2025 special report on Egypt includes:

> COMMENT: Egypt battles structural issues
> GOVERNMENT: Egypt is in the eye of Trump’s Gaza storm
> ECONOMY: Egypt’s economy gets its mojo back
> OIL & GAS: Egypt gas project activity collapses amid energy crisis
> POWER & WATER: Egypt’s utility projects keep pace
> CONSTRUCTION: Coastal city scheme is a boon to Egypt construction

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Wil Crisp

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    After initial concerns that the market would experience a sharp downturn and project cancellations following the onset of conflict in the region, regional president McGrail says WSP has yet to see a single major contract cancelled across its regional portfolio.

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    “None of the projects we are currently involved in have been put on hold or suspended,” he says. “It is more re-evaluation. Some of that is investor sentiment, but some of it is materials and logistics as well, which people do not necessarily consider.”

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    Infrastructure pivot

    That focus points to where McGrail expects the next few years of growth to come from. Rail sits at the centre of the UAE story, alongside road upgrades and other major developments in Abu Dhabi. In Dubai, the clearest signal of intent is the expansion of Al-Maktoum International airport.

    “Al-Maktoum is a really good indicator of the future direction of travel,” he says. “That is not a project that is slowing down. There has been a commitment to Emirates that it will move there, and it is still progressing.”

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    Saudi reset

    In Saudi Arabia, the recalibration story predates the conflict, and McGrail says the change should be read as a strength rather than a retreat.

    “I am positive,” he says. “When the reprioritisation started at the beginning of 2025, having lived through the global financial crisis here, I saw the decision to stop, re-evaluate and reprioritise expenditure as a positive. When Vision 2030 was set, Saudi Arabia had not won Expo or the World Cup, so the reprioritisation was the right thing to do. Saudi Arabia will come out of it stronger. Short-term pain, long-term gain.”

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    The $3bn Taweelah C combined-cycle gas turbine (CCGT) project has been the UAE power sector’s standout contract award this year, accounting for the majority of the $4.17bn in awards as of early September.

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    Register for MEED’s 14-day trial access 

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    > COMMENT: Saudi projects hold steady
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    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
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    > POWER: Saudi Arabia’s power award activity slows
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    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
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    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20580855/main.jpeg
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