According to the ministry of energy the government is close to approving Chevron’s development plan (FDP) for the Aphrodite gas-field, centered around exports to Egypt using a subsea pipeline, while retaining the much-discussed floating production unit.
Soon after, it is expected that Eni will announce its plans for the development of the Cronos gas-field in block 6. This will be a subsea production development, with the gas taken by subsea pipeline to the Zohr facilities in Egypt for treatment and export to the Egyptian gas grid.
Much has been said about liquefaction and export to Europe, but given Egypt’s dire gas situation this is unlikely. In Egypt all gas is sold to EGAS –that manages all gas activities- and it decides on its use. At least over the foreseeable future any imported gas will be used to cover Egypt’s burgeoning gas deficit.
In reality, though, control of East Med gas is in the hands of the oil&gas companies. Regional governments can try to influence them, but cannot tell them what to do. Nothing will happen without their agreement. And their priorities are driven by commercial factors shaped by global markets, mindful of energy transition and longevity of hydrocarbons.
This should not be mistaken as a sovereignty issue. Oil&gas companies will not embark on unprofitable projects, at the whim of unrealistic wish-lists by politicians made for political ends, often with little or no attention paid to commercial factors, especially in cases that do not impinge on national security.
Where oil company plans and host government interests coincide, we get the best options, as, for example, is happening with export of Israeli gas to Egypt.
Egypt’s challenging economic situation
According to international economic indices, Egypt’s economy is considered “repressed”. Egypt is struggling with a prolonged economic crisis, with a debt over $150billion, made worse by chronic foreign currency shortages and rising debt repayment obligations and interest costs. The country has entered 2025 facing familiar problems and challenges despite a recently-secured $8billion IMF loan.
High interest rates are constraining investment at a time when national revenue is being hit hard by a dramatic drop in income, more than 70 per cent, from the loss of shipping passage through the Suez Canal.
2025 has the potential to become a year of partial economic recovery, helped by restored Red Sea shipping security and a promise to remove energy subsidies completely by the end of the year.
But Trump’s threats to impose tariffs on imports, and the threat of a trade war with China, could lead to further disruptions and price hikes globally that are bound to impact Egypt’s fragile economy.
An even bigger challenge is the increasing need to rely on imported LNG to avoid blackouts. Egypt plans to import around 160 LNG shipments in 2025, costing about $8billion, based on an average price of $48-$50million per shipment, a huge drain on its balance of payments. And this, at a time when the country is unable to export LNG due to its dire gas situation, depriving it of much-needed revenues and foreign currency.
Egypt’s dire gas situation
Egypt relies heavily on natural gas for power generation. But it has been unable to maintain payments to the international oil&gas companies. It owed them over $5billion in 2024. Following 3 payments last year the arrears were reduced, but the country is still unable to keep up with clearing new debt. Unless it can keep-up regular payments, the oil&gas companies will not commit to major new investments in E&P. As a result, Egypt has been experiencing a rapid decline in gas production, down 35 per cent over the last three years and still declining. According to MEES, its natural gas needs amount to about 180million cubic meters per day (mcm/d), and, with increasing population, still growing, while current production stands at only 130mcm/d. The increasing deficit is covered by LNG and Israeli gas imports.
Gas production at Zohr has now slumped to about half its design capacity. Even more importantly, Zohr is now estimated to hold only 309bcm proved reserves, just over one-third of the 850bcm in-place reserves announced by Eni when the gasfield was discovered in 2016. At this level, Zohr ranks behind Israel’s Leviathan, with 480bcm proved reserves, and Tamar, with 315bcm.

These dire developments have turned the country from an exporter to an importer of LNG, yet again, with a devastating impact on its balance of payments. Without such imports, the country risks experiencing severe power blackouts.
On top of that, the country has become even more reliant on Israeli gas, with all the political implications given the Gaza and Lebanon wars. In fact, Israel sanctioned new projects in 2024 to increase gas exports to Egypt from 10bcm/yr now to 21bcm/yr by 2028. This is about a third of its gas consumption.
This situation poses a security risk. The Gaza war showed how fragile energy security is around the East Med.
Steps recently taken by the government could potentially ramp-up gasfield discoveries and production and thus eventually curb the need for imports. But that will take time.
Cyprus gas developments
Cyprus has discovered more than 400bcm of natural gas, but developing it is proving to be a challenge.
Between Aphrodite and Cronos, Cyprus has the capacity to export as much as 10bcm/yr to Egypt, starting as early as 2028, provided decisions are taken soon. This can make a difference in ensuring Egypt’s future energy security.
But even if Chevron receives FDP approval, I expect there will be delays in progressing to construction. The company announced significant cuts to its capital expenditure program for 2025/2026 in early December. It intends to focus on its operations in the Americas and the Gulf of Mexico, prioritising maximisation of profits.
There may also be delays in the development of the Cronos gas-field by Eni and export to Egypt. As a result of the country’s prolonged economic crisis and inability to maintain stable payments, international oil&gas companies are not accelerating projects related to Egypt.
ExxonMobil has embarked on a promising drilling round, starting with a well in Egypt’s North Marakia block where it has made a promising discovery. This is being followed by exploratory drilling in Cyprus blocks 5 and 10. Although seismic data showed promising prospects for new gas discoveries, I do not expect the company to make statements about exploitation plans before 2026.
Like 2024, 2025 will continue to face serious challenges in terms of energy. My choice would be to prioritise the completion of natural gas imports at Vasiliko that has the potential to seriously reduce the price of electricity.
Click here to change your cookie preferences