Egypt slashes renewables target to focus on natural gas

• Renewable target reduced to 40%
• Plans to increase gas output
• Rebuilding trust with foreign operators

Egypt has cut its renewable energy goal for 2040 from 58 percent down to 40 percent and will focus on natural gas in order to meet increasing energy demand, according to Karim Badawi, the minister for petroleum.

Before hosting the Cop27 climate conference in 2022, the North African state announced a target of achieving a 42 percent renewable energy mix by 2035. It subsequently amended the target to 2030.

The government announced a 58 percent target in June, which has now been abandoned, as the cash-strapped Cairo government strives to overcome a deep electricity crisis.

Egypt, the world’s 11th-largest natural gas producer, has positioned itself as a supplier of liquefied natural gas (LNG) to Europe.

In 2022, LNG exports climbed to nearly 9 billion cubic metres, bringing $8.4 billion in revenues, according to the petroleum ministry. 

But the country is facing shrinking gas output from domestic gas fields, including Zohr, the largest, turning it into a natural gas net importer. 

Zohr gas production has tumbled to less than 20 billion cubic metres, about 40 percent below its designed capacity.

Egypt’s gas production fell from 67 billion cubic metres in 2022 to an estimated 56 billion cubic metres in 2024.

The most populated Arab country, Egypt holds 2.1 trillion cubic metres of gas and the third-largest reserves in Africa, behind Nigeria and Algeria, but bought more than 50 LNG cargos this year. 

It is expected to issue another tender, according to Reuters, for up to 20 LNG tankers to cover demand for the first quarter of 2025.

In September, the government announced it intends to restore natural gas production to normal levels by June 2025, with plans to increase production at Zohr by drilling new wells starting in the first quarter of 2025.

• Egypt to ramp up gas output from major concessions
• Egypt looks to Gulf investors to end power blackouts
• Egypt to increase gas imports from Israel

Badawi, since taking office in July, has been trying to rebuild trust with foreign oil and gas companies, which slowed local operations due to outstanding arrears, exacerbating the gas shortages.

He has met several international companies, including Eni of Italy, which operates the Zohr field.

In June the government cleared $1.3 billion of arrears to foreign oil and gas companies operating in the country.

“This is a message to all of us to work together to increase discoveries and attract more investments through the bids being offered for exploration, aiming to achieve new discoveries in the region, which holds more wealth, particularly natural gas,” Badawi said at the Mediterranean Energy Conference 2024 on Sunday.