Gas prices surge in Europe after Egypt announces a halt to imports

Newsletter

31 Oct 2023

Gas prices surge in Europe after Egypt announces a halt to imports. Gas prices in Europe surged after the cessation of Egyptian imports, dissipating hopes of resuming exports to Europe. This exacerbates supply risks amid Israel’s expansion of its ground offensive in Gaza. Futures contracts for December rose by approximately 4.5% on Monday. Prices increased by about 30% from their levels before the outbreak of the Middle East war three weeks ago, underscoring the vulnerability of the European market to geopolitical risks following last year’s energy crisis. (Bloomberg Asharq)

Egypt’s natural gas imports fell to zero from 800 million cubic feet (mcf) per day, leading to more power cuts, the Egyptian cabinet said.
The war in Gaza had an immediate effect on Egypt’s energy security after Israel ordered Chevron to close its second-largest field, Tamar, a few days into the war. Egypt’s gas imports fell almost 20% following the decision. The following day Chevron announced it had suspended all exports to Egypt via the EMG pipeline and that it would begin routing supplies through the Arab Gas Pipeline that links Israel, Jordan and Egypt. Additionally, gas from the Leviathan field has been diverted away from Egypt, according to Chevron, which said last week that it was prioritizing deliveries to Israel. It said it was still fulfilling part of its contracted shipments to Egypt, without saying how much. (Bloomberg & Reuters)
Even before the suspension of gas imports, Egypt LNG exports were down heavily on the year due to high seasonal demand and declining gas production.
The value of the country’s gas exports fell almost 60% y-o-y to 2.3 billion USD during the first seven months of the year, with hardly any cargoes leaving Egypt since the start of the summer. The nationwide power outages that have been ongoing since July have been worse this week, with the Electricity Ministry extending the duration of daily power cuts to at least 90 minutes from one hour previously. The cabinet also blamed declining renewable energy output as well as unseasonably warm weather for the longer blackouts. (Bloomberg & Reuters)
Egypt reopens the initiative allowing expatriates to import cars for a renewable three-month period.
Egyptians living abroad will have three months starting today to apply to import tax-free cars. But this comes with the condition that they deposit the equivalent of the saved duties and taxes in a five-year FX certificate of deposit. The new law allowed the Prime Minister to renew the initiative for another three months. The Madbouly government expects to drum up between USD 450 mn and USD 1 bn via the new iteration of the program. (Economy Plus & Enterprise)
Last Sunday, the House agreed on the VAT Act imposing an EGP 0.50 VAT on all tobacco products, including heated tobacco products and liquid tobacco.
The House Planning and Budget Committee head Fakhri El Fiqi said that the tax will raise around 8 billion EGP, while House Agriculture Committee head Hesham El Hosary recommended that the proceeds from the tax “be used to spend on health services.” It’s worth noting that the market is already facing a shortage of cigarettes that has affected an increase in the prices and seen parallel-market imports. (Economy Plus)
The government has approved an increase in the production capacity for cement factories.
The Ministry of Trade and Industry has approved a 10% increase in the production capacity of cement factories over the specified quantity for each factory during the month of November to meet the current high demand for the product. In case the demand continues to rise, factories will increase their production by 15% in December in agreement with the Ministry of Trade and Industry. (AL Borsa News)
Central Bank of Egypt’s gold holdings decline 2.8% in September.
The gold holdings of the Central Bank of Egypt (CBE) declined by 2.8 percent to 235.64 billion EGP (7.64 billion USD) in September from 242.42 billion EGP. The CBE’s total assets declined to 4.62 trillion EGP in September from 4.76 trillion EGP in August. Meanwhile, CBE’s liabilities decreased to 4.59 trillion EGP in September from 4.75 trillion EGP in August.
It’s worth remembering that Egypt ranked 30th globally in terms of gold reserves holdings by the end of the second quarter of 2023,
according to a report by the World Gold Council. Net international reserves (NIRs) at the CBE reached 34.97 billion USD in September, the highest level in 16 months. Egypt’s foreign asset deficit amounted to nearly 25.92 billion USD in August. The country seeks to collect 191 billion USD in annual US dollar revenues by 2026. Moreover, the Egyptian government plans to attract 5 billion USD from offering power plants and state-owned companies from October 2023 until June 2024. (Daily News)
Prohibition on engaging in the export and import of precious metals without registration with the Jewelry Stamping Authority.
Dr. Ali Moselhi, the Minister of Supply and Internal Trade, issued a ministerial decree to regulate the trading of precious metals and valuable gemstones. The decree stipulates that every natural or legal person is prohibited from engaging in trading, export, and import activities in the field of precious metals and valuable gemstones unless registered with the Jewelry Stamping and Weights Authority using the designated application form. (Arab Finance)
Belton enters the Jordanian consumer finance market through "Ovtec Holdings.".
Belton Financial Holdings, one of the major financial institutions in Egypt, is planning to enter the consumer finance market in Jordan through its subsidiary, Seven, in collaboration with Jordan's Ovtec Holdings." Consumer finance, widely defined, encompasses any activity aimed at providing finance for the purchase of goods and services for consumption purposes, with repayment over a time period of at least six months. (Bloomberg Asharq)
Bahraini group GFH plans to invest 500 million USD in Egypt in 2024
The GFH Group from Bahrain is currently exploring multiple investment prospects in Egypt, with the goal of finalizing one of them by early next year. The group has initially set a target of 500 million USD for investments it plans to channel into the Egyptian market through its investment divisions focusing on the healthcare, education, and logistics sectors. This engagement aims to explore cooperative and joint investment opportunities, and there is potential for the group to become a shareholder in that platform at a later stage. (Daily News)
HSBC's profits soared 240% to 7.7 billion USD in the third quarter.
HSBC's profits in the third quarter of 2023 increased by 240% to reach 7.7 billion USD. These results fell below expectations, but the bank announced its intention to buy back shares worth 3 billion USD. The largest bank in Europe by market value had reported pre-tax profits of 21.7 billion USD for the first six months of this year, up from 9.2 billion USD in the same period last year. (Hapi Journal)
AUR Leasing to issue 1.7 billion EGP securitized bonds next month.
The company's objective in conducting this issuance is to diversify its financing activities and settle some of its outstanding debts with banks. AUR Capital is fulfilling the roles of financial advisor and issuance coordinator, while El Dreny and Partners are serving as the legal advisors for the issuance. Simultaneously, AUR Consumer Finance is set to finalize the issuance of securitized bonds worth 300 million EGP this week. (Daily News)