Egypt Slashes Fertilizer Gas Supplies by 33% as LNG Costs Bite

Egyptian fertilizer producers face a fresh 33% cut in natural gas supplies, Misr Fertilizers Production Company confirmed on November 8, deepening an energy squeeze that has already forced a 20% reduction on the industry this year. The move is a deliberate trade-off: Cairo is throttling export-oriented fertilizer output to limit purchases of expensive liquefied natural gas on tight global markets.

The arithmetic behind the decision is stark. Egypt has spent $5.8 billion on LNG by October 6 against a full-year 2026/27 budget of roughly $10.1 billion, an analyst noted in October. Prices have already run above the ministry's estimates, and demand typically climbs again in spring and summer. On that trajectory, the budget will be overrun before the fiscal year peaks.

Why is Egypt short of gas?

Domestic gas production has failed to keep pace with rising demand, particularly for power generation. That gap has pushed Egypt deeper into the LNG import market at the worst possible moment. The Iran war has tightened global LNG supplies and driven prices higher, squeezing import-dependent economies across the Mediterranean basin.

LNG imports hit a year-to-date high in July before easing from August, according to the source data. The Petroleum Ministry did not immediately respond to a request for comment on the new cuts.

Which producers are affected and how are they responding?

Misr Fertilizers Production Company disclosed the 33% reduction in a company statement. The cut follows an earlier 20% curtailment of gas supplies to fertilizer plants nationwide.

When that first reduction landed, MOPCO and Abu Qir Fertilizers and Chemical Industries said they would manage production in line with available gas. Abu Qir added that it had contingency plans covering inventory management and the rescheduling of maintenance windows — a signal that plants intend to idle capacity rather than halt outright.

For global fertilizer buyers, the commercial consequence is straightforward. Egypt is a significant nitrogen fertilizer exporter, and curtailed ammonia and urea output removes supply from an already firm market. Shippers and charterers should expect fewer fertilizer cargoes moving through Egyptian ports such as Alexandria and Damietta in the coming months, tightening vessel availability in the Mediterranean handy and smaller segments.

What is Cairo doing on the fuel side?

Egypt is also substituting cheaper liquid fuels where it can. State-run Egyptian General Petroleum Corporation bought six cargoes of high-sulphur fuel oil for delivery in November and December, trading sources told Reuters last month. The HSFO purchases land in a market already disrupted by shipping's own dynamics — fuel oil prices have spiked as vessels reroute away from Red Sea risks and burn more bunkers on longer Cape of Good Hope voyages.

That overlap matters for operators. Egyptian state demand for HSFO adds a marginal buyer to a supply pool already stretched by rerouted tonnage, applying upward pressure on bunker prices in the East Mediterranean at the same time LNG costs are squeezing the national budget.

What comes next for shippers and producers?

Fertilizer producers now operate under a two-stage gas cut totaling an initial 20% followed by a further 33% on remaining allocations, and further curtailments cannot be ruled out if LNG prices stay elevated through winter. Abu Qir's maintenance-rescheduling playbook suggests output losses will be managed gradually rather than through dramatic shutdowns, softening but not eliminating the export hit.

Forwarders and commodity traders handling Egyptian urea and ammonia flows should watch two indicators in the weeks ahead: Petroleum Ministry statements on gas allocation, and the pace of EGPC fuel oil tenders. With the LNG budget on course to overrun and spring-summer demand still ahead, Cairo's incentive to keep industrial gas curtailed — and fertilizer exports constrained — will only strengthen.