Global liquefied natural gas (LNG) prices have surged further, touching a 2-year high due to tight supplies and high demand as winter sets in. The price for LNG to North East Asia was placed by traders at $11/mmbtu, according to industry sources; a 510% jump compared to the low of $1.8/mmbtu recorded earlier during the year.
Naeem Research sees that the continuing price run, is good news for Egypt from a BOP angle as the country is expected to export more than 1.2 bcf/day of excess natural gas this year (with the two LNG plants now fully operational).
Naeem added that as per our calculations, generating more than $4.5bn p.a. of export revenues at the current price. However, for local heavy industries, we now expect no further price cuts (from the current price of $4.5/mmbtu), given the very high opportunity costs involved (for the government) in making any such moves.
Moreover, Abu Bakr Emam, head of the research department at Sigma Securities Brokerage, said that the main disadvantage of the high price of natural gas is the Egyptian industrial companies incurring great losses, mainly the fertilizer companies whose 70% of operation depends on natural gas.
Fertilizer companies use natural gas as fuel and raw material, so higher prices affected companies badly, especially those in the public business sector, such as the Kima Aswan, which for the first time, achieved losses amounting to EGP 1.3bn. The Delta Company for Fertilizers Chemical Industries is also at stake and is close to liquidation, transfer, or merger as a result of the company’s suffering from the high prices of gas on one side, and technical problems on the other side.
