*Egypt’s gas revenue maximization model over the past year has revolved around importing maximum volumes from Israel and switching out gas for fuel oil in power plants in order to maximize LNG exports, for which state firm Egas typically achieves spot prices with sales via tender. For 2022, fuel oil burn rose three-fold to a five-year high 116,000 b/d (MEES, 24 February).
*But with Mediterranean spot LNG prices having fallen to $11/mn BTU, around $60/B on an ‘oil equivalent’ basis, it is questionable whether switching gas for fuel oil in power plants is still in the money. This is especially the case given that Egypt’s fleet of CCGT power plants operates substantially less efficiently on liquid fuels versus gas – back of the envelope calculations suggest that fuel oil would have to be sourced at $45/B or so to compete with $11/mn BTU gas in CCGT plants. (CONTINUED - 804 WORDS)