Market Trends of Egypt Natural Gas Industry
This section covers the major market trends shaping the Egypt Natural Gas Market according to our research experts:
Industrial Segment Expected to Dominate the Market
Natural gas consumption in Egypt is primarily driven by the industrial sector, with the power generation sector capturing a 60% share of the total consumption portfolio in 2021. The government's efforts to promote natural gas utilization in the energy sector led to the utilization of a high share of the fuel in the sector. Moreover, the increased availability of natural gas in the country prompted the industrial players to use fuel for power generation as well as for other industrial applications.
The gas-based power generation capacity was around 3.343 GW (5.7%) in 2021. The fuel usage is also propelled by the Combined Cycle Power Plants (CCGT), in which gas and steam are both used as fuel. The CCGT-based power generation was recorded as 32 GW in the country. Egypt has fabricated more plans to expand the gas-based power generation capacity in the near future.
A number of power plant projects are currently in the planning phase. For instance, the East Delta Electricity Production company planned a gas-fired power plant project, Al-Arish gas-fired project, in North Sinai, Egypt. The company is expected to start the construction of the power plant in 2024, and the project is likely to be in service in 2025.
Natural gas consumption also got a boost from other industries. Egypt is the seventh-largest producer of ammonia in the world, and ammonia production uses natural gas-based steam reforming. Apart from this, other industrial applications also encouraged the use of natural gas in around 100 factories in 2021. Such developments are expected to increase the share of the industrial sector in the Egyptian natural gas market in the coming years.
Natural Gas Exploration and Production Activities Expected to Witness Significant Growth
Egypt is the third-largest producer of natural gas in Africa. The country produced around 67.8 billion cubic meters (bcm) of natural gas in 2021. The increased production of natural gas was attributed to the increase in demand at the national and international levels. It was recorded in the third quarter of 2021 that the LNG exports from the country were around 1 million tons, the highest among all the Arab countries.
In 2021, the country witnessed around 13 gas discoveries in the Western desert, the Mediterranean, Sinai, and the Eastern desert. The Egyptian government entered new exploration and production agreements to boost investment in the natural gas industry.
For example, in January 2022, Eni, the Italy-based oil and gas company, bagged an exploration contract in five blocks in Egypt. The blocks are located in the Eastern Mediterranean Sea, Western Desert, and Gulf of Suez. The company will be partially investing in the projects with other companies. In 2021, seven oil and gas production agreements were signed with a total signature bonus of USD 16 million, and 17 development contracts with a signature bonus of USD 7 million were signed for the Eastern and Western deserts. The initiative came from international companies. Owing to such developments, the Egyptian natural gas market is expected to have substantial growth in the near future.
