Egypt is facing growing pressure to secure reliable and affordable energy as domestic consumption continues to rise. For years, natural gas has served as the backbone of the country’s energy system, especially after major offshore discoveries like the Zohr field briefly put Egypt on the map as a regional gas exporter. But as local gas production declines, the government has turned to importing liquefied natural gas (LNG), diesel, and fuel oil (mazut) to plug the gap — a costly move that’s straining public finances. In this report EOG sheds light on the optimum source of energy Egypt should be using.

Natural Gas

In Egypt, natural gas is used in several sectors both for generating electricity and as a source of thermal energy in some industries such as cement, iron and steel, fertilizers, and petrochemicals.

During the last ten years, the use of natural gas has increased in Egypt due to its abundance and for being the cleanest source of energy. In 2018, Egypt recorded the peak of natural gas production at 7.1 billion cubic feet per day (bcf/d), thanks to Zohr field development. This enabled the country to achieve self-sufficiency and export the surplus abroad.

However, production has started to decline in the past few years, due to several factors including the growing demand and natural depletion of the reservoirs and less investments at the end of the fiscal year (FY) 2023/24, the production reached 5.69 bcf/d, based on EGAS data. On the other hand, Egypt’s gas consumption stood at 6.028 bcf/d.

In April 2025, natural gas production dropped to 3.485 bcf/d, according to the Joint Organizations Data Initiative (JODI).

This pushed Egypt to import gas to fill this gap.  Recently, the country’s imports have surged sharply. According to the Oxford Institute for Energy Studies, Egypt’s imported liquified natural gas (LNG) of 1.75 bcm in Q2 2025 versus 0.1 bcm in the same period in 2024. The average cost of LNG imports is $13.5 per million British thermal units (mmBtu).

Diesel and Mazut

Mazut and Diesel are also used to operate power stations, as well as in the transportation sector and fertilizers industry. Egypt’s diesel production increased to 10.9 million tons in 2022, compared to 9.7 million ton in 2021, according to data released by the Central Agency for Public Mobilization and Statistics (CAPMAS).

Yet , the decline in gas output increased demand on diesel so that the consumption reached 14.1 million tons in 2022. This led to the government raising its prices for the first time in years in July 2022, this was followed by several lifts to its subsidies leading to an increase in its price by 63 % in 2024,followed by 14.8 % in April 2025.

In mid July, Bloomberg reported that the increase in demand on diesel by Egypt as an alternative to gas during the last period affected the EU’s ability to secure its needs. Egypt’s imports rose 65% yo-y to 370k bbl/d in the first half of July. According to Vortexa, a global research company focused on energy, the inflows have surpassed all previous monthly records dating back to 2016, underlining the country’s mounting energy pressures amid declining domestic gas output and limited LNG infrastructure.

For Mazut, the data is very scarce. Mazut accounted for 13.35% of power generating in August 2022, up 169.11% from August 2021, data from Egyptian Electric Utility and Consumer Protection Regulatory Agency showed. “Mazut is needed to operate the old dual-fuel stations that run on diesel and mazut,” Hossam Arafat, Head of the General Division of Petroleum Materials at the Federation of the Egyptian Chambers of Commerce , told Egypt Oil and Gas (EOG). Recently, Madbouly announced that Egypt would need $1.18 billion to export mazut and natural gas to meet the electricity demand.

Renewable Sources

Egypt has great potential in the renewable energy resources. especially solar and wind power. “Egypt seeks to be a leader in the production of solar and wind energy, and the new green hydrogen energy, as part of its energy transition strategy,” Wafaa Ali, Energy Economic Expert said to EOG.

Egypt has abundant solar irradiance, making it an ideal location for both photovoltaic (PV) and concentrated solar power (CSP) projects. Projects like the Benban Solar Park are significant contributors to the national grid. According to the expert, the high average wind speeds along the Gulf of Suez make it a prime location for wind farms, with the region being one of the best in the world for wind energy production.

Renewable resources of energy contribute 12% to 20% of the current energy mix, according to Arafat. As part of its ambitious energy strategy, Egypt aims to generate 42% of its electricity from renewable sources by 2030.

Former Minister of Electricity, New and Renewable Energy, Mohamed Shaker told Middle East News Agency (MENA) that the price of a kilowatt hour from the sun is 2 cents, and 2.4 cents for wind energy, noting that it is the cheapest in the world. Still these resources are not reliable due to the need for more investments.

Ali highlighted that the state seeks to increase renewable energy capacity from 8 gigawatts to be 10 gigawatts and generates EGP100 billion from the private sector for establishing new projects.

The Optimum Choice

Economic and petroleum experts agree that natural gas remains the best choice for power generation, while stressing the importance of using all resources as part of the energy mix. Arafat explained that electricity generation sources are interchangeable depending on availability noting that he prefers for the time being importing natural gas over other resources. “Importing energy resources should depend on the added-value that will be gotten from and natural gas is the optimum source from which we get added-value,” he said.

He stressed that the country cannot rely on one source alone, as some are suitable in certain locations, but not others. “Renewable sources are not available in all locations of Egypt, so, it should be used as part of the energy mix,” he elaborated.

Wafaa Ali said the current situation shows that natural gas remains the most prominent option for operating powerfuel stations, adding that renewable energy’s economic impact is greater long term due to lower operating costs, while gas is preferred in the short term.

Experts offered a positive outlook for Egypt’s gas production. Hossam Arafat said, “Egypt can compensate the decline in natural gas production in case of intensifying the developments of the fields after paying the arrears and providing flexibility and incentives to the investors.”

Ali hailed Egypt’s resorting to launching new exploration areas with promising reserves and signing agreements with major international companies. “Egypt has an exploration portfolio consisting of 61 exploration opportunities,” the economic expert highlighted.

In 2025, Egypt made notable progress in oil and gas production, supported by new discoveries, higher production, and government efforts to attract foreign investment, provide incentives, and pay foreign partners’ arrears on schedule, aiming to restore normal production rates in line with the national plan.