Egypt secures $3 bil LNG deal with Shell, TotalEnergies to meet 2025 demand: sources

Egypt has signed agreements worth around $3 billion with Shell and TotalEnergies to secure 60 shipments of LNG for 2025, multiple market sources told S&P Global Commodity Insights.

Shell declined to comment, and the other counterparties were unavailable for comment.

The deal was said to have been made sometime in late 2024, market sources told Commodity Insights.

In line with the previous Egypt deals, market players expect the current deal also to be on a floating price basis, linked to Dutch TTF. However, unlike the tenders, which entailed extended payment terms of 180 days, this deal could have payment terms flexibility ranging up to a year, according to market sources.

Market sources also said that the spread for Northwest Europe against TTF had changed substantially since December, and the pricing for delivery to Egypt presently for spot cargoes would be different from the pricing in late 2024, sources based in Singapore said.

According to Platts' assessment, the East Mediterranean marker for February delivery averaged $13.851/MMBtu, and the price for January delivery averaged $14.279/MMBtu.

EMM for March delivery was assessed at $16.096/MMBtu on Feb. 6, a 41.5-cent/MMBtu discount to TTF month-ahead and a 13.5-cent/MMBtu premium to Northwest European and West Mediterranean LNG markets.

Egypt's LNG reliance

In June 2024, Egypt resumed LNG imports for the first time since 2018, driven by a swiftly widening gas supply-demand gap. The country has quickly increased its imports through multi-cargo tenders.

The country issued 20-cargo tenders for both Q3 and Q4 last year, bringing in 2.5 million mt through its Hoegh Galleon floating storage and regasification unit at the Ain Sukhna import terminal in 2024. Additionally, most of Jordan's 0.9 million mt of imports in 2024 at the Aqaba terminal were also primarily to satisfy Egypt's demand. Most recently, Egypt issued a four-cargo tender for February and March delivery.

These tenders commanded hefty premiums over Dutch TTF given the extended payment terms, Suez Canal fee, extended shipping and insurance premiums.

The latest Q1 2025 tender was awarded at TTF plus $0.80-$1/MMBtu. For the Q4 tender, prices were awarded at TTF plus $1.50-$1.60/MMBtu. In Q3, prices ranged between TTF plus $1.60/MMBtu and TTF plus $2/MMBtu.

LNG and gas prices continue to increase over the winter and are expected to provide little respite even into the summer season.

This could be one of the reasons why Egypt has increasingly started looking at relatively longer-term deals to cover its gas demand while protecting itself marginally from the spot market bullishness.

In addition to the four-cargo tender and 60-cargo deal in 2025, market participants had also reported a strip of 15 cargoes awarded for the first half of 2025.

Egypt could also benefit from the reversed arbitrage that has been advantageous for Europe, leading to a growing shift of volumes toward the Atlantic basin. This pattern is anticipated to persist as the summer season approaches.

"With the negative JKM-TTF spread till October, I think their preference is to keep the cargoes in Egypt that is a premium market," an Atlantic-based trader said.

For the summer 2025 season-ahead product, Platts valued the interbasin spread between JKM and NWE at 17.1 cents/MMBtu on Feb. 6, signifying a closed arbitrage. In comparison, the season-ahead spread was assessed at $1.325/MMBtu during the same period last year.