2022 sent the energy markets on a wild ride: The outbreak of war in Ukraine sent energy to the front pages of the global press this year. Europe’s loss of Russian fossil fuels helped drive up inflation and raised thorny questions over how to ensure energy security in an increasingly uncertain world. Meanwhile, the ongoing transition to greener forms of fuel exacerbated worries over a longer-term global imbalance between energy supply and demand.

Volatility in the global markets had knock-on effects here at home, from rising prices at the pump to pricier fuel and raw materials costs for industry. But there were also silver linings, as the shifting geopolitical landscape to our north presented a chance for Egypt to accelerate long standing ambitions to become a regional energy export hub.

The outbreak of war in Ukraine sent oil and gas markets spiraling: Russia had long been the dominant energy supplier to the EU, sending the bloc around a third of its crude oil and 40% of its gas. That all changed with the invasion of Ukraine and subsequent breakdown of relations between Moscow and the West. By December, the EU and UK had put in place an embargo on Russian seaborne crude, while the G7 had implemented a price cap that is expected to effectively halt the purchase of Russian crude by member states. Russia had already shuttered the Nord Stream gas pipeline to Germany in preemptive retaliation. Brent crude futures shot up to approach USD 130 a barrel at the height of the uncertainty in the spring, before falling back to around USD 85 per barrel by the end of the year as Europe succeeded in securing winter energy supplies.

As Europe scrambled to find alternatives to Russian gas, Egypt stepped up to the plate: As a net importer of oil but a net exporter of natural gas, Egypt looked to offset rising oil prices by capitalizing on Europe’s supply crunch, ramping up shipments of liquefied natural gas (LNG) from the Idku and Damietta liquefaction plants. Our LNG exports were expected to rise 14% y-o-y by the end of the year to 8 mn tons, 90% of which has been directed to Europe to meet growing demand as Egypt looks to replace Russian supply, Oil Minister Tarek El Molla said recently. Egypt wants to raise gas export revenues to USD 12 bn this year “if [gas] prices remain elevated,” up from USD 7-8 bn in 2021, he said.

To ramp up LNG exports at short notice, the gov’t looked to curb domestic electricity demand: Spying the opportunity created by Russia’s exit and looking to drum up much-needed FX, the Madbouly government in August moved to limit the country’s use of electricity in order to raise natural gas exports. Government buildings and sports facilities were asked to cut their consumption, including by turning the lights off outside daytime hours, a lower limit of 25°C was put in place for A/C in malls, and retailers were asked to reduce bright lighting in storefront. The government hoped the measures, which remain in effect, would make available some 15% of the gas that is currently allocated to the nation’s power stations, netting itself an extra USD 450 mn a month in revenues. Price increases on natural gas supplied to cement producers and brick kilns came into effect in October, in another move to dampen domestic demand and redirect more gas for export. And our burning of mazut fuel oil in power stations soared to a five-year high, as the cheaper fuel was used in place of natural gas that was redirected for export.

And prices at the pump continued to rise: The government’s fuel pricing committee raised petrol prices in the first, second, and third quarters of 2022, extending a streak of price hikes to six consecutive quarters. Diesel prices also went up for the first time in years at the start of 3Q 2022, as the state looked to reduce its subsidy bill amid rising global energy prices. There were no price hikes in the last quarter of the year as energy markets began to cool. Prices at the pump are now up 23-28% since April 2021, depending on which grade you’re putting in the tank. Public transport fares — including taxis, microbuses and buses — had increased by 5-7% across the country as of July.

These short-term measures helped us ride out volatility in 2022 — but the government also made progress on long-term energy export ambitions. To sustain the growth in energy exports, a serious infrastructure push is needed. We saw signs of that push coming to fruition this year, as Egypt looked to strengthen regional partnerships in a bid to position itself as the key link between energy suppliers across the Mediterranean and European buyers. Egypt signed a landmark nine-year agreement with the EU and Israel in June to increase gas exports to Europe, which will see the three sides work together on the “efficient utilization” of infrastructure to increase gas shipments to the EU, as well as reduce methane emissions and explore carbon capture projects. Meanwhile, progress continued on plans to construct a pipeline connecting Cyprus’ Aphrodite natural gas field to Egypt, which is expected to be up and running by 2025.

Major multinationals are on board to help ramp up Mediterranean flows: Italian energy giant Eni — which holds a 50% stake in the Damietta LNG plant and produces around 60% of the country’s gas — this year said it wants to develop LNG projects in the region, including in Egypt, under a plan to invest around EUR 4.5 bn in upstream activities every year until 2025. Chevron is also keen to tap Med gas, and is working with state-owned EGAS to develop infrastructure to transport gas from offshore fields to Egypt and increase exports. London-headquartered Energean is also banging the drum for more EastMed gas investment. Meanwhile, a contested merger between Capricorn Energy and Israel’s NewMed could pave the way for closer energy ties between Israel and Egypt if shareholders give it the all-clear.

Oil Minister Tarek El Molla called on European development partners to match the private sector’s enthusiasm and help fund new drilling in the Mediterranean, arguing that accelerating hydrocarbon flows could help tame Europe’s energy crisis as well as accelerate the green transition.

There’s no shortage of local assets to tap: The year closed out with news of a large gas find by Chevron in the Eastern Mediterranean, with MEES reporting that the field could contain as much as 3.5 tn cubic feet of gas. December also brought a fresh international tender by EGAS, which this week opened bids on 12 new oil and gas exploration blocks in the Mediterranean and Nile Delta.

Don’t think the year in energy was all about oil and gas: The COP27 climate summit brought major developments in cleaner fuels, green hydrogen, and renewable energy — including initial agreements worth a total USD 117 bn for at least 29.5 GW of fresh local wind power developments and nine green hydrogen and green ammonia facilities. We cover the year in green energy in detail in Part II of our Going Green Year in Review, here.