Egyptian Fertilizer Production Hit by Israeli Gas Supply Disruption
Egyptian fertilizer producers faced a major setback on Friday as a drop in natural gas imports from Israel forced them to halt operations, according to industry sources.
The disruption was caused by the suspension of operations at major Israeli gas fields following military strikes against Iranian nuclear facilities and missile factories. As a result, an emergency plan was put in place to prioritize gas allocations, leading to supply cuts to some industries, as stated by Egypt’s Petroleum Ministry.
To cope with the gas shortage, power stations have increased their use of fuel oil to maximum levels, with some plants switching to diesel to ensure the stability of the gas network and avoid power load reductions.
While the ministry did not specify a timeline for when gas supply might return to normal, it was reported that two of Israel’s main gas fields, Leviathan and Karish, were closed on Friday. However, the Tamar field remained operational, according to a gas analyst.
The Israeli Energy Ministry acknowledged disruptions to natural gas supply, resulting in a temporary suspension of exports. Efforts are being made to resume supply as soon as possible.
Egyptian Prime Minister Mostafa Madbouly emphasized the need to monitor the regional situation closely and increase strategic stocks of various commodities. In a meeting with top energy officials and the central bank, plans were discussed to ensure stable gas supplies to power stations, including contracting gas shipments and stockpiling fuel oil. Work is also underway to bring floating storage and regasification units (FSRUs) online.
Currently, Egypt has received three FSRUs, with one already injecting gas into the national grid. When all vessels are operational, Egypt’s daily regasification capacity will reach 2,250 million cubic feet, more than double last year’s capacity. The country is also looking to lease a fourth unit for emergencies.
Since 2022, Egypt has increasingly relied on Israeli gas due to declining domestic production. Israeli gas now accounts for 40-60% of Egypt’s total imported supply and 15-20% of its consumption, according to data from the Joint Organisations Data Initiative (JODI).
In response to the gas supply disruption, Egypt signed agreements this week to purchase at least 150 cargoes of liquefied natural gas in the country’s largest-ever import purchases, totaling over $8 billion at current prices.
Overall, the gas supply disruption highlights the challenges faced by Egyptian industries reliant on Israeli gas and underscores the importance of diversifying energy sources to ensure stability in the face of geopolitical uncertainties.