Egypt's Energy Paradox: Importing LNG While Exporting Influence

Egypt's energy sector is facing a paradox - it imports liquefied natural gas (LNG) while exporting its influence as an energy hub in the Eastern Mediterranean. The country's reliance on LNG has increased due to declining domestic production and rising consumption, population growth, and energy-intensive industrial development.

The discovery of the Zohr gas field in 2015 led to expectations that Egypt would meet domestic demand and become a reliable exporter. However, output declined from its 2021 peak, shifting the country's position from LNG exporter to importer.

Egypt now depends on imports from Israel's Tamar and Leviathan fields, which has acquired significance beyond energy trade due to ongoing tensions between Cairo and Tel Aviv. Any disruption to Israeli gas flows could affect Egypt's electricity generation, industrial activity, and LNG import costs.

The country's role as a processing and re-export centre is expanding, but its security of supply relies on uninterrupted imports. The domestic cost of this regional influence is rising LNG imports, which put pressure on foreign currency reserves, increase electricity generation and industrial production costs, and may shift Egypt's energy strategy from a strategic asset to a costly financial commitment.

Cairo needs to revive domestic production, reduce gas use in power generation through renewable energy deployment, and diversify its external suppliers. If it succeeds, rising LNG imports could form part of a wider architecture providing access, connectivity, and regional leverage.