Egypt could potentially position itself as a major seasonal player in the gas sector as the market dynamics begin to shift
According to research from global natural resources consultancy firm Wood Mackenzie, Egypt's gas markets market is poised to undergo profound changes in the next five years. This could have an impact on the global LNG market as Egypt positions itself as a prominent seasonal player.
The previous five years have consisted of falling gas production but switching from a net exporter to a net importer, Egypt's fortunes look set to change. As a number of major offshore gas developments come on stream in the next few years, including BP's West Nile Delta and Atoll fields and Eni's massive Zohr find, the North African country will add a cumulative 41 bncm a year of gas production by 2022. These new volumes will push the country's gas market back to surplus.
According to the Wood Mackenzie's analysis, this surplus will be seasonal. Indeed, better gas availability will boost domestic consumption in the power sector, peaking in the summer months, while utilisation rates at gas-intensive industries will recover. Overall, this will exacerbate Egypt's domestic gas demand seasonality. In the medium-term, LNG imports may still be critical to balance the market in the summer. Meanwhile, Egypt could export surplus volumes during the winter, taking advantage of northern hemisphere winter LNG prices.