Gas
Egypt targets deepwater gas to curb import dependence
Egypt is ramping up deepwater natural gas exploration to boost domestic supply, reduce reliance on costly imports, and restore its position as a regional energy hub.
Key points
- Egypt aims to lower expensive liquefied natural gas imports through domestic deepwater production.
- Upstream reforms include clearing $6.1 billion in arrears and raising offshore gas offtake prices.
- Proximity to existing infrastructure helps lower capital requirements and speed up project timelines.
Deep-water exploration forms a central pillar of Egypt's upstream strategy as the nation seeks to address declining output from mature reservoirs. Growing domestic demand and rising reliance on liquefied natural gas imports have created an urgent need for fresh supply sources. According to energy consultant Omar Youssef Sallam, imported liquefied natural gas costs between $12 and $13.5 per million British thermal units, whereas domestically produced deepwater gas costs $6 to $7 for the same quantity. Replacing 1 billion cubic feet per day of imports with domestic output could generate annual savings ranging from $1.9 billion to $2.8 billion.
What happened
Developing deepwater reserves requires substantial upfront capital for seismic surveys, exploratory drilling, and subsea infrastructure. In January 2026, the Egyptian Natural Gas Holding Company announced plans to expand the Zohr field and drill two new wells for approximately $360 million. Meanwhile, discoveries such as the Denise W find by bp in April 2026 highlight the advantages of locating reserves near established facilities. Situated in the Temsah Concession, the Denise W-1 well benefits from its shallow 95-metre depth and close proximity to processing infrastructure, which helps minimise development expenditure and shorten timelines to production.
To attract necessary capital, Cairo has implemented key regulatory adjustments. Authorities cleared $6.1 billion in outstanding payments owed to international energy companies by June 2026, which unlocked $19 billion in fresh investment commitments. Additionally, offtake price ceilings for offshore gas were lifted above $6 per million British thermal units from a previous limit of $2.65, alongside the introduction of flexible contractual models.
Why it matters
Strengthening domestic gas production carries significant economic implications for energy importing nations across Africa and the wider region. Egypt faced a widening oil trade deficit reaching $18.3 billion during the 2025/26 financial year due to elevated gas purchases from abroad. Producing gas domestically reduces foreign currency outflows, as states typically pay foreign partners in hard currency only for their specific share of output, unlike entire liquefied natural gas cargoes. For international investors and African policymakers, Egypt demonstrates how pairing infrastructure-led exploration with robust fiscal incentives can improve project economics and safeguard long-term energy security.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Gas is the flexible backbone of many grids and the designated transition fuel in many national plans, from LNG trade to domestic LPG and CNG. Supply security and pricing drive both power reliability and emissions.
76.9% of electricity in Egypt came from gas in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
