* Egypt seeking to defer up to 25 LNG cargoes this
* Talks with Egypt, trade houses and producers ongoing-trade
* Global gas market faces loss of key importer amid
* Offshore discoveries dramatically change Egypt's fortunes
(Adds comment from Egypt's petroleum minister in paragraph 6)
By Oleg Vukmanovic
AMSTERDAM, May 11 Egypt is holding talks with
its liquefied natural gas (LNG) suppliers to defer contracted
shipments this year and aims to cut back on purchases in 2018,
as surging domestic gas production squeezes out demand for
costly foreign imports.
Cairo's desire for gas self-sufficiency by the end of 2018
bodes ill for traders having to reshuffle LNG out of the country
amid concern over the impact on global gas prices if replacement
markets for the world's eighth-biggest importer of the
super-cooled fuel are not found fast enough.
State-run importer EGAS aims to defer dozens of liquefied
natural gas (LNG) cargoes due this year, analyst, trade and
industry sources say.
It is also scaling back LNG purchase plans for 2018 from 70
to as low as 30 cargoes, one Egyptian industry source added,
signalling the withdrawal of one of the fastest-growing LNG
importers from the global stage.
EGAS did not respond to requests for comment.
"Obviously we will definitely be deferring but I cannot
recall the numbers," Egypt's Petroleum Minister Tarek El Molla
As demand growth among the old guard of Asian gas-consuming
nations such as Japan slows, new entrants - led by Egypt - have
accounted for 86 percent of net growth since mid-2014, EDF's
head of energy market analysis Teddy Kott said.
"That was a demand disruption that not only exceeded
Fukushima in terms of scale but rivalled it in terms of pace,"
he said, referring to Japan's 2011 nuclear meltdown, and
resulting reactor closures that lifted the LNG out of its last
A trader said: "Egypt was the biggest short going."
Global LNG output is set to jump by a third, hitting 452
million tonnes by 2020, and with Asian spot prices LNG-AS down
by 72 percent since early 2014, adding new markets to soak up
the glut is key to stemming the rout.
At the heart of Egypt's revival is a stunning run of
discoveries, a potential boon for the government as it embarks
on politically sensitive economic reforms and struggles to rein
in inflation running at a three-decade high.
"Test flows from (BP's) West Nile Delta have started ahead
of schedule and Eni's giant Zohr find is progressing quickly on
track for first gas later this year, but it's output from the
Nooros field that has surprised everyone this year," said Adam
Pollard, senior North Africa oil and gas analyst at Wood
Eni's Nooros is churning out 900 million cubic feet of gas
daily, Pollard said, becoming Egypt's biggest producing field
since it came on stream late in 2015.
Production from two BP fields in the West Nile Delta
development, Taurus and Libra, just started eight months ahead
of schedule. Its North Alexandria gas fields are set to boost
output as well.
"Talks with Egypt on deferring cargoes are ongoing," a LNG
trader said. "And there are also talks between the traders and
producers on where to divert these supplies to," he added.
Once a top-10 LNG exporter, the Arab country of 92 million
people has so far consumed around 12.5 million tonnes since it
started importing in 2015, according to Reuters data.
Benefiting from several multi-billion-dollar LNG buying
sprees, commodity traders from Trafigura to Glencore carved out
a niche for themselves by shouldering credit risks for
producers, including Qatar, averse to supplying Egypt directly.
Any deferments therefore will disproportionately hit trade
houses who must wrangle approvals from producers before
diverting the cargoes into other markets.
Already this year EGAS has deferred about ten shipments,
with about 10-15 shipments left to go, trade sources said.
The scale and speed of Egypt's turnaround suggests the
government may yet wean itself off foreign gas but how
sustainable that turns to be will depend on domestic pent-up
"Natural gas demand in Egypt has been constrained from power
generation to fertilizer production so gas demand could
potentially rebound much more than initially anticipated,"
Anne-Sophie Corbeau, research fellow at the King Abdullah
Petroleum Studies and Research Centre said.
"The appetite for LNG in that region is going to be
challenged but will not disappear."
(Additional reporting by Eric Knecht in CAIRO, editing by Susan