Qatar promised Egypt five free shipments of LNG this summer after a meeting of representatives from the two countries’ governments in Doha, giving cash-strapped Egypt a reprieve from worsening energy shortages.
The LNG is intended to help Egypt generate more electricity so it can avoid wider power outages as energy demand peaks in the summer months.
However, one Egyptian official said that as part of a broader agreement with Qatar, his country may have to pay higher than hoped prices for subsequent natural gas supplies.
Egypt has faced a natural gas and diesel shortage since last year, which has led to rising food costs, long lines at filling stations and electricity blackouts.
The energy supply problems have deepened popular discontent with Egypt’s Islamist government and exacerbated broader economic difficulties there.
The agreement came after Qatar’s crown prince, Sheikh Tamim bin Hamad al-Thani, gave directives “to provide all sorts of support to the people of Egypt,” said the country’s oil minister, Mohammed al-Sada.
The five free cargoes of Qatari LNG, which will be shipped in large oceangoing tankers, come as “a gift to the Egyptian people during the summer months, with the first of these shipments beginning at the end of July,” and continuing until mid-September, the Egyptian petroleum ministry said on its website.
The five shipments, however, fall short of the supply Egypt needs to fully solve its domestic energy shortage.
Each cargo would hold around 3.2 Bcf of natural gas, said Tarek el-Barkatawy, the head of state owned Egyptian General Petroleum.
Egypt consumed 5 Bcf of natural gas a day in 2011, according to data on the website of the United States Energy Information Administration.
“The gift we got today from Qatar basically gives us more room and time to finalize swap deals with them and other producers,” Mr. Barkatawy said.
Source: Dow Jones & Hydrocarbon Processing