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Monday, 4 February 2019

Egypt is leading the region’s decline in liquefied natural gas demand

Egypt’s emergence as a regional gas hub is driving a decline in regional demand for liquefied natural gas, writes Verity Radcliffe for Bloomberg. While Egypt was the region’s biggest LNG importer in 2016 and 2017, we are now on track to become a significant exporter this year after several gas discoveries allowed us to pull the plug on LNG imports last September. The switch from being a net importer to becoming a net exporter positions Egypt among the main reasons for the regional turnaround from a two-year demand surge that outpaced global growth between 2014 and 2016 to a rapid reduction of 37% last year.

So what can regional and global LNG markets expect? “The Middle East is now expected to make up less than 4% of global imports for at least eight years,” Radcliffe said. Last year, almost half of Egypt’s LNG imports came from Qatar, the world’s biggest exporter of the commodity. They are unlikely to feel much pain from our absence, however, as global LNG demand is expected to grow at more than double the rate of supply — especially in Asia, which accounts for well over half the LNG demand worldwide. Jordan is also expected to increase its reliance on “pipeline imports from Egypt, trimming its need for LNG,” Radcliffe notes. Egypt has begun increasing its natural gas exports to Jordan to 100 mcf/d, with plans to increase further to 250 mcf/d during the summer.

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