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27 Jun 2024 | 16:40 UTC
By Sakshi Jalan
Highlights
Awards 20 LNG cargoes
Tender received competitive offers from 15 players
It includes mix of fixed price, formula-linked cargoes
Egyptian General Petroleum Corp., the parent company of EGAS, awarded a total of 20 cargoes June 26 aimed at securing energy supply in the country, a source familiar with the matter told S&P Global Commodity Insights June 27.
This is the first LNG tender handled by the state-owned company.
"EGPC is responsible for handling all tendering processes related to domestic oil and refined products imports/exports, and due to its strong communication and collaboration with the major players in the market, the decision was made to allocate the issuing and handling of the LNG tender to EGPC on behalf of EGAS," the source said.
In addition to the 17 cargoes, EGPC awarded three more cargoes, two of which were for August delivery and one for September delivery.
The company received offers from around 15 market players, all of which were at very competitive levels, it said.
The awarded tender comprised both fixed prices and TTF-linked cargoes.
"EGPC awarded the bidders a mix of fixed and formula prices for the LNG cargoes aiming for risk mitigation, which ended in encouraging the bidders to rush in their submission with competitive offers," said the source.
The price levels ranged between TTF plus $1.6/MMBtu and TTF plus $2/MMBtu. Of the total cost, around 40 cents/MMBtu accounted for the 180 days of extended payment terms.
The awardees included Total, BP, Vitol, Trafigura and Aramco.
This is the biggest LNG tender the country has seen both in terms of the number of cargoes and the spread of the delivery period. The previous three LNG buy tenders in the country have been for one cargo each for prompt deliveries.
"EGPC successfully managed and finalized this tender in a timely manner, especially considering that most of the LNG portfolio is already committed, and shifting the delivery to Egypt within such a short timeframe presents a significant challenge," the source said.
The country has been facing increased demand for gas and LNG owing to the strong power demand during peak summer temperatures and reduced domestic production. The situation has been worsened by ongoing geopolitical tensions in the Middle East, which have put pressure on natural gas supply into Egypt.
Egypt has returned to importing LNG cargoes for the first time since 2018, bar the four domestically produced cargoes arriving at its FSRU over 2019-2023.
Egypt has been a strong exporter of LNG to Europe in the last five years, but the current market dynamics mean market participants are unsure whether the country will be in a position to supply even in the winter months.
The government's efforts are currently focused on ensuring uninterrupted power supply, for which it has allocated $1.2 billion to procure LNG and heavy fuel oil.
The current purchase of 20 cargoes could cost Egypt between $882 million to $910 million for standard 3.5 TBtu cargoes, according to Commodity Insights' estimates.
Platts, part of Commodity Insights, assessed DES Northwest Europe for August delivery at $10.776/MMbtu June 26, a 0.5-cent/MMBtu premium to the Dutch TTF. It assessed the DES East Mediterranean marker for August delivery at $10.876/MMBtu, or a 10-cent/MMBtu premium to Northwest Europe.
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