Egypt's Energy Hub Ambitions Get Boost with Cyprus Gas Deal

After years of negotiations and delays, Egypt's long-awaited plan to become 'a regional energy hub' has received a boost from a new link-up between natural gas fields in Cyprus and processing facilities in Egypt. European energy giants TotalEnergies and Eni have taken their final investment decision to fund the project, which will allow for natural gas produced in Cyprus to be liquefied and exported from Egypt's Mediterranean coast by 2028.

The deal is expected to bolster 'Europe's energy security' as the bloc's main natural gas suppliers have been disrupted by the war on Iran and ongoing tensions over Ukraine. From Egypt's perspective, the investment brings the country a step closer to fulfilling its ambition to become a regional energy hub, a policy target that successive governments have failed to hit since 2018.

The Cyprus deal has major potential to bolster Egypt's foreign currency inflows from its Mediterranean coast and reduce its dependence on Israeli gas imports. However, the long-term prospects of this and similar deals were immediately stress-tested when a drone strike hit energy vessels related to Egypt's gas imports at its Damietta Port.