Plans to rent gas import terminal further delayed

Despite almost two years of planning and negotiations, Egypt’s efforts to secure a floating terminal that will allow the country to import liquefied natural gas have once again been put on hold. Renting an import terminal is one of the most viable short-term solutions to Egypt’s persistent energy shortages.

Earlier this week, Oil Minister Sherif Ismail told Reuters that the terminal would not be put in place until December, pushing back a previous estimate of October or November.

State gas company EGAS originally called for bids to supply a terminal in October 2012. At the time, it was seeking to have a terminal in place by May 2013. When the project was initially proposed, experts thought the timeline was optimistic but possible. Several global firms rent the terminals, and once an agreement on terms and payment is reached, the necessary infrastructure can be put in place quickly.

However, the deadline has since been pushed back repeatedly, leaving Egypt to suffer through two summers without a way to import natural gas, which the country relies on heavily for both industry and electricity generation. No official explanations have been given for the extended delays.

Egypt’s natural gas infrastructure was put in place at a time of surplus. The country has two export terminals, which cool natural gas until the fuel can be shipped as a liquid on specially equipped ships. In recent years, demand for gas has been outstripping supply, and the government has diverted gas meant for export into the domestic grid.

This has caused difficulties for foreign firms like BG, which in February declared force majeure after gas diversions by the Egyptian government left the company unable to fulfil export contracts. These diversions have also left Egypt’s government with some US$6 to 7 billion in debt to oil companies.

In the meantime, Egypt’s export terminals, which cannot be used to import gas, are sitting idle. Plans have been floated to use the terminals to process gas from Israel, which could be brought to Egypt by pipeline. As of the beginning of September, US-based Noble Energy and its Israeli partner Delek Group stated that negotiations for this highly controversial project were ongoing.

Egypt has a number of plans in the works to increase its energy supply, including new gas and oil exploration deals, coal imports, nuclear power and renewable energy projects. However, all of these options require extensive infrastructure development before coming online.