The government is moving forward with plans to hike natural gas prices for industrial consumers, according to a current government official, a former petroleum ministry official, and three sources from the iron and petrochemicals sectors who spoke to Mada Masr this week.
The sources estimated that the price hike will average at US$1 per million British thermal units.
Consumers across Egypt, both household and industrial, currently pay for gas at heavily subsidized rates, with each sector — such as fertilizers or ceramic tiles — billed according to its own pricing formula.
The move comes as the government struggles to manage a decline in natural gas production that has forced it to import large amounts of relatively expensive liquified natural gas (LNG) to meet rising domestic demand over recent years.
The average $1 increase per million Btu is intended to ease pressure on growing import costs, the government source and two members of the Federation of Egyptian Industries (FEI) told Mada Masr, while noting that the rate was not set higher in order to preserve export competitiveness.
Petrochemicals, iron and nitrogen fertilizers are likely to be hit hardest by the increase, as they rely on gas both as a production input and as fuel, a source in the FEI’s Petrochemicals Division said.
Industrial sectors have already received official letters notifying them of the upcoming price hike, a former Petroleum Ministry official told Mada Masr.
“Everyone will try to wriggle out of it at first, but eventually they’ll say OK — better to operate at full capacity than remain in the current situation,” the source said.
With domestic gas production in decline and import flows unstable, many factories — especially in the petrochemicals and fertilizers industries — are currently unable to operate at full capacity.
Regular volumes imported from Israel have fluctuated since the outbreak of its genocidal war on Gaza in October 2023, with disruptions or scale backs interrupting supplies to factories on at least four occasions.
In mid-June, the government cut gas supplies to the sector and began injecting additional quantities of mazut into power plants as part of an emergency plan after Israel suspended gas exports to Egypt and Jordan, shutting down its fields at the onset of its war with Iran.
Egypt is currently receiving around 1 billion cubic feet of gas per day from Israel — back to pre-Iran war levels.
But to meet domestic demand for both industrial use and electricity generation, Egypt is increasingly relying on imported LNG, which now covers up to half of the country’s total gas needs. LNG imports are expected to add another 2.25 billion cubic feet per day to available supply once two more floating storage and regasification units (FSRUs) come online.
Delays hamper operation of temporary infrastructure to meet summer energy deficit
Delays in launching the new FSRUs are holding up the planned inflows, however. Technical issues have prevented Energos Eskimo, one of the FSRUs brought in to remedy short energy supplies over the summer, from launching operations, according to a government source who spoke to Mada Masr on condition of anonymity.
Problems with the loading arm that connects the vessel to the dock and delayed preparations to the SUMED terminal in Ain Sokhna, where the vessel is set to berth, have pushed its start date to mid-July, the source said.
Prime Minister Mostafa Madbuly had announced on June 22 that Energos Eskimo, docked at the Ain Sokhna Port for nearly a month, would begin operations by the end of June. A second vessel, Energos Power, was to follow during the first week of July, pending completion of “other highly complex technical matters,” he said.
But the government source cast doubt on the prospective timeline, estimating instead that the vessel would enter service by the end of July.
The vessel remains at the Dekheila Port in Alexandria, where it underwent technical modifications to adapt to Egypt’s warmer climate — in contrast to the colder conditions in Germany where it was docked before. At Ain Sokhna, preparations are still underway to complete the Sonker terminal, which will host the vessel.
Mada Masr reached out to the petroleum minister’s office for comment, but received no response by the time of publication.
The delay in connecting the new regasification units has already forced four-five liquefied natural gas vessels that had arrived in Egypt to reroute after waiting for two weeks without being able to unload, the source said. The volume of the rerouted LNG shipments exceeded the capacity of the sole regasification unit currently in operation, and Egypt was paying penalties for each day of delay, according to the source.
Meanwhile, Egypt is relying solely on the Norwegian FSRU, Hoegh Galleon, which entered service in mid-2024. That vessel was brought in as Egypt re-entered the LNG import market amid a steep drop in domestic gas production.
Combined, the three FSRUs would cover roughly one-third of the country’s domestic gas needs, estimated at 6 billion-7.5 billion cubic feet daily.
Price hike for industrial sector seeks to keep rates competitive
The Petrochemicals Division is set to convene next week to discuss the pending natural gas price hikes for the industrial sector, a second source in the division told Mada Masr on condition of anonymity.
“I can’t say the state doesn’t have the right to do so. We’re importing gas now, and the costs have gotten high,” they said.
The industrial sector accounts for around 20 percent of Egypt’s total gas consumption, making it the second-largest consumer after electricity generation.
The planned gas price hike is likely to form part of broader negotiations between the government and fertilizer producers, the former official said. The state would raise the gas price while agreeing to purchase fertilizers from factories at higher rates than it currently offers, according to the source.
While such a deal could ease pressures on the domestic market, it may not be enough to sustain the sector’s export competitiveness.
The first government source said that Egypt’s decision to raise industrial gas prices aims to maintain its position in global markets, particularly for iron exports. Seeing the recent decision to raise industrial gas prices by $1 in Turkey — a key competitor in iron exports — encouraged Egypt to follow suit, the source said. This view was echoed by the head of FEI Building Materials Division, Ahmed al-Zeiny.
Gulf countries, particularly Qatar and Saudi Arabia, pose strong competition to Egypt in other sectors, including petrochemicals and nitrogen fertilizers, the first source in the petrochemicals division said.
The government has increased gas tariffs steadily over recent years in line with recommendations by international financiers, who have placed pressure on the country to move away from subsidizing public services and economic activity.