By Ahmed M El-Wahsh
Euro-commodity brokers earned a large share of meticulously watched endeavours to source Egypt with approximately $2bn worth of liquefied natural gas [LNG] as they exert great efforts to develop into a sector, which is characteristically governed by large oil corporations. The following three leading companies; Trafigura, Noble Group and Vitol will supply a vast amount of LNG to Egypt, but the remaining quantities will be sourced by British Petroleum.
As the global economy has witnessed in the previous months, the market for fuel has been a very volatile one, otherwise cursed with a lack in demand, over-supply of the “black gold” and exponentially plummeting prices. But it is seen that the LNG companies are gaining a strong hold of the global gas trade via several different means, such as cooperating with major players in the oil sector, especially ones that operate on credit and payments risk, particularly when excess supplies of oil surface, creating platforms for them to function.
In addition, it has become obvious that LNG traders are now opting to supply to new and incompetent buyers – which in fact speculates that there are increased areas for manoeuvrability in terms of expanding towards and entering new markets. With that being said, Egypt has arisen as to being the new major market for LNG; seeing as the government looks to executive policies for the easing of the global energy crisis – specifically after inflamed demand and plummeting output, Egypt has transitioned itself from being an oil and gas exporter to a net importer.
The domestically owned Egyptian Natural Gas Holding Company (EGAS) has set in motion that they have incentives for purchasing seventy-five LNG cargoes over the next two forthcoming years. Natural gas in Egypt is heavily relied upon, as it is put to use in a range of different sectors – especially in the household and industry markets. Although Egypt had previously suffered hindrances on acquiring imports stemming mainly from the fact that the nation lacked processing terminals, towards the end of March, the inauguration of a joint venture between Egypt’s EGAS and Norway’s Höegh LNG will see the opening of a terminal processing the liquid into gas form.
Finally, it is always sunny in Egypt; together with the struck deals on processing and imports, government officials have also been able to secure six more cargoes from Sonatrach (Algeria) and Gazprom (Russia) with a five-year importing contract ensuring a steady supply of LNG.
Ahmed El-Wahsh holds a masters degree in Banking and Finance from Queen Mary, University of London. He works as an assistant portfolio manager at QUMMIF Investment Hedge Fund