The resumption of Israeli natural gas exports to Egypt has offered some respite in an energy crunch rippling through the country's economy and into people’s homes.
Two sources told The National on Tuesday that supplies from Israel’s offshore fields, which resumed in limited volumes on Friday after being disrupted by the Iran war, had climbed back to about one billion cubic feet per day by Monday, almost reaching the level recorded before the start of the conflict.
The sources said the supplies were meant for Egypt’s domestic network and onward exports of liquefied natural gas (LNG), after several weeks in which Israel had curtailed most exports to Egypt and Jordan, referring to “force majeure”. Earlier statements by Israeli officials said the country aimed to maintain pipeline deliveries to Egypt and Jordan despite war-related shutdowns at some offshore platforms.
“Israel is trying to strategically center itself in the Middle East’s energy infrastructure but this is highly unlikely. It has actively sought to reshape regional energy logistics, both with the Egypt gas deal and with Netanyahu's proposal to route Gulf oil and gas across the Arabian peninsula to Israeli ports, bypassing both the Strait of Hormuz and Bab Al Mandab,” Abdalla Nasef, a Washington-based political analyst told The National on Tuesday.
For Cairo, the recovery of Israeli gas is crucial but not sufficient. Since the start of the war, international LNG prices have surged from about $12 to 14 per million British thermal units to about $20, once shipping and regasification are included, energy market analyses show.
The regional conflict and disruption to energy exports have pushed Egypt’s monthly natural gas import bill from about $560 million to $1.65 billion. That marks a nearly a threefold increase for broadly similar volumes.
Egyptian Prime Minister Mostafa Madbouly said last month that the country’s overall energy import bill had more than doubled since the conflict began, emphasising the strain on already fragile public finances.
Power crunch
That pressure is now being felt in low‑income areas of Cairo and Giza. Four Egyptians living in different working‑class districts told The National that power cuts have become a daily occurrence since mid-March, often lasting more than two hours at a time. They added that the disruption was also accompanied by cuts to water supplies, forcing poor families to drastically change their routines.
“Before leaving for work in the morning, I have to fill up my tub, all my buckets, my washing machine and all the bottles of water I have on hand because the water is often gone until 11pm," said a mother of three in the Talbia district of Giza.
The government has publicly framed recent rationing measures as temporary and necessary. In late March, authorities ordered shops, restaurants and malls to close at 9pm for at least a month, dimmed street lights and outdoor advertising, and revived remote work arrangements for parts of the civil service in an effort to conserve electricity and reduce gas burn in power plants.
Officials insist domestic gas supplies “remain secure”, but concede that the cost of maintaining those levels has surged. At the same time, the government has raised fuel prices across the board and increased electricity tariffs for industrial and high‑use brackets, further squeezing factories already facing high costs.
IMF commitments
To make matters worse, monetary policy is also being pulled into the crisis. A central bank official told The National on Monday that the Monetary Policy Committee expects to raise interest rates at its meeting on May 21, despite earlier discussions about cutting them to support credit to the industrial sector.
Figures in the industrial sector have lobbied repeatedly for an easing of lending terms to preserve production and jobs, the official added. But the central bank must balance those pressures against its commitments under an International Monetary Fund programme to keep policy tight enough to cool demand and anchor inflation expectations.
The IMF had urged authorities to avoid subsidised directed lending and to move towards positive real interest rates, as part of its extended fund facility agreed on with Egypt. Those tensions are unfolding on the eve of the Spring Meetings of the IMF and World Bank and when global lenders are more constrained than in past crises.
Cairo is already operating under an IMF programme that requires fiscal consolidation, currency flexibility and structural reforms, while also relying on Gulf and European partners for inflows.
Diversifying fuel sources
The surge in the energy import bill complicates the arithmetic. Every extra dollar spent on LNG and fuel imports is money no longer available for social initiatives, investment or reserves accumulation.
With the Strait of Hormuz effectively shut by Iran, Egypt has looked to diversify its fuel sources. Officials have moved to activate an agreement with Libya signed earlier this year, under which the national oil company in Tripoli will supply about one million barrels of crude a month to Egypt to help cover shortfalls.
The arrangement, described by the sources as a stopgap measure, is meant to reduce the need for spot purchases at inflated prices and to keep refineries running closer to capacity, while gas imports remain expensive and volatile. Cairo is also trying to maximise domestic production and longer‑term supply security.
New gas discoveries
On Tuesday, Italian energy company Eni said it successfully completed drilling of the Denise W-1 exploration well in the Temsah concession in the Eastern Mediterranean. It is estimated to hold about two trillion cubic feet of gas and 130 million barrels of associated condensate.
In late March, the US APA Corporation, in partnership with the Egyptian General Petroleum Corporation, announced a new natural gas discovery in Egypt’s Western Desert, after drilling the SKAL‑1X exploratory well in the South Kalabsha area.
The Ministry of Petroleum said preliminary tests indicated daily production of about 26 million cubic feet of gas and 2,700 barrels per day of condensate, a figure that specialists say is commercially significant, though not transformative. The find adds to a series of recent onshore and offshore discoveries that Egypt hopes will help to reduce its import needs and restore some export capacity once prices and security conditions stabilise.
President Abdel Fattah El Sisi used the Egypt International Energy Conference and Exhibition last week to warn that the region was on the brink of “the largest energy crisis in modern history”. He said the Iran war, combined with the effects of the pandemic and Ukraine conflict, created a “dual shock” of supply constraints and soaring prices that could devastate developing economies. Mr El Sisi appealed directly to US President Donald Trump to end the war with Iran.
Tourism rebound
Despite the grim backdrop, there are glimmers of hope. Tourism operators say that, after a wave of cancellations in the first weeks of the war, bookings are rebounding towards pre‑war levels.
For one company in Giza, the rate of bookings from travellers from Russia, China and European countries, especially Germany, is now about 75 per cent of the number before the war, two Egyptian tourism administrators told The National on Monday. Bookings with a business focused on the Red Sea have risen to about 80 per cent of the level before the conflict, they added.
“I think tourists were worried early on because they didn't know the limits of the war,” Zaki Abdallah, a tour operator in Giza, told The National. “But after a couple of weeks, it became clear that the war would remain in the Gulf and that Egypt was safe, so people started to call us and rebook. The Chinese and Russian tourists started to book first, then the Europeans. But we haven't had a single American booking since the start of the war.”
