Egypt’s Fertilizer Producers Halt Operations Amid Gas Crisis

As regional tensions simmer and an unprecedented heat wave grips the nation, many of Egypt’s leading fertilizer manufacturers temporarily ceased operations due to an acute shortage of natural gas, an interruption critical for electricity generation.

Alexandria Fertilizers Company (AlexFert), along with Abu Qir Fertilizers, Misr Fertilizers Production Company (MOPCO), Egyptian Chemical Industries Company (KIMA), and Sidi Kerir Petrochemicals (SIDPEC) halted operations during the last week of June.

These closures mark the second instance this month that chemical and fertilizer companies have shut down their plants after the government temporarily reduced gas supplies to these facilities.

With the relentless rise in temperatures, there has been a dramatic spike in electricity consumption, with air conditioning units working overtime, as reported by Al Ahram. This surge in demand has placed immense pressure on the country’s gas supplies, crucial for meeting the soaring energy needs.

This led to power cuts, much needed to preserve the operational efficiency of the nation’s electricity transmission and natural gas networks.

The natural gas shortage is affecting power stations in Egypt, as eight of 11 power stations rely exclusively on natural gas, while slightly more than half employ a combination of natural gas with either mazut or diesel, types of fuel oil, according to a 2020 report by the Egyptian Electricity Holding Company.

Egyptian Prime Minister, Mostafa Madbouly, blamed the shortage on a production halt in a neighboring country, “an apparent reference to Israel,” and pressures on dollar resources, according to Reuters.

Egypt awarded its largest tender in years on 26 June to purchase 20 cargoes of liquefied natural gas (LNG) to meet summer demand, according to Reuters. 

Madbouly announced the allocation of USD 1.18 billion (EGP 56.8 billion) to purchase essential petroleum products, including mazut and natural gas, according to Al Ahram.

The spokesperson of the Ministry of Petroleum and Mineral Resources, Hamdy Abdel-Aziz, said that USD 1 billion (EGP 48.15 billion) would be spent on natural gas and USD 180 million (EGP 8.6 billion) on mazut. 

On 2 July, Egypt welcomed the arrival of an LNG shipment, the first of the 21 fuel deliveries, according to Abdel-Aziz. He also noted that an additional vessel transporting a shipment of natural gas is currently offloading onto a gasification ship, where it will undergo liquefaction before being injected into the country’s gas network.

The delivery, consisting of 3.5 million cubic feet of LNG, docked at the Ain Sokhna terminal on 1 July, Monday evening. Abdel Aziz confirmed that the LNG will be converted to natural gas within the week, marking a significant step in stabilizing Egypt’s energy supply.

The 21 shipments of fuel over the summer would be sufficient to end the power cuts, Abdel-Aziz emphasized.