Seven Egyptian fertilizer producers have agreed to pay a total of $175 million in advance for natural gas at a temporary price 50% above the current rate, in a deal that gives them greater freedom to export production for 45 days.
Each company is expected to pay $25 million to gas suppliers for the quantities available to its plants. The arrangement sets the gas price at $12.75 per million British thermal units, up from $8.50, beginning Monday, November 16. Company officials said the factories had started transferring the advance payments.
The agreement allows the producers to export their output during the period without delivering their usual subsidized fertilizer allocations to the Ministry of Agriculture. However, the higher price does not guarantee an unrestricted supply: gas deliveries to the plants will continue to be reduced by between 20% and 40%, according to government and company sources.
The arrangement follows reductions in gas allocations that began earlier this month as Egypt seeks to manage limited supplies and the cost of imported fuel. The government initially cut deliveries to fertilizer and methanol plants by 20%, then raised the reduction to about 33% for major producers, including Abu Qir Fertilizers, Misr Fertilizers Production Company, known as MOPCO, and Egyptian Fertilizers.
The cuts have raised concerns about production levels and the industry’s ability to meet export contracts. Gas is both a key raw material and a source of energy for nitrogen fertilizer production, making supply disruptions particularly consequential for plants that depend on it.
The new agreement is intended to keep factories operating and help producers meet export commitments, while shifting more of the cost of gas procurement to the companies. Officials have said that limiting gas supplies to energy-intensive industries can reduce the government’s spending on imported gas. The price paid by factories, however, is distinct from the full cost of bringing gas into the country, which can include purchasing liquefied natural gas, shipping it and converting it back into a usable form.
Fertilizer producers have described the new price as manageable, though not without pressure on margins. Urea prices in international markets have approached $500 per tonne, according to industry sources cited in the reports, offering some support to exporters. The profitability of the temporary arrangement will depend on companies’ production costs, how much gas they actually receive, and the prices they secure for exported product.
Saeed Abou El-Maati, chairman of the Chemical Industries Holding Company and secretary-general of the Arab Fertilizers Association, said producers were negotiating with importers to reschedule contracted shipments without penalties while gas supplies remain constrained. He warned that if Egyptian exports continue to fall, international buyers could turn to alternative suppliers, potentially weakening Egyptian companies’ market share.
The export stakes are significant. Egypt’s fertilizer exports reached $2.53 billion in the first nine months of 2026, up from $2.22 billion in the same period of 2025, an increase of 14.2%, according to figures from the Export Council for Chemical Industries and Fertilizers. Maintaining shipments is important not only for producers but also for the country’s foreign-currency earnings.
The temporary export exemption also intersects with domestic agricultural supply. Agriculture Minister Alaa Farouk has said that agricultural cooperatives hold about 400,000 tonnes of subsidized fertilizer, enough for more than two months and representing over 40% of the estimated 900,000 tonnes needed for the winter season. He has said the gas reductions would not affect the quantities allocated to farmers or the subsidized prices.
Egypt requires fertilizer producers to supply the government with about 2.4 million tonnes annually for distribution to farmers through agricultural cooperatives. The temporary agreement pauses those deliveries for the participating companies during the 45-day period, while relying on existing stocks to cover domestic needs. Whether that buffer remains sufficient will depend on how long the supply restrictions last and how quickly normal production resumes.
The country’s gas squeeze reflects a widening gap between domestic supply and demand. Local production has been estimated at about 3.6 billion cubic feet a day, compared with consumption of roughly 6.2 billion cubic feet on a typical day and as much as 7.2 billion during peak summer demand, when power generation needs rise. The government has also been seeking to reduce gas use among industrial customers to contain the expense of imported supplies.
For fertilizer producers, the agreement offers short-term flexibility rather than a resolution to the supply problem. They can direct their available output to export markets and avoid some near-term contractual penalties, but they must pay more for gas while still operating under delivery cuts. The longer-term outlook will depend on the duration of the restrictions, the cost and availability of imported gas, and whether the temporary terms are extended or replaced when the 45-day period ends.
