Egypt Daily News – The Egyptian government has Informed Egypt’s Fertilizer Plants of a Complete Gas Supply Suspension for Two Weeks.
-All fertilizer factories, especially state-owned ones, will cease production during this period
-Production halt will negatively impact the supply of fertilizers in the local market
-Zaghloul: Fertilizer exports have dropped significantly due to gas-related issues
-20% decline in fertilizer production since the beginning of this year
A senior source in the fertilizer sector said that the government has notified factories and companies of a complete suspension of gas supplies (100%) for a two-week period starting May 18, due to scheduled maintenance work on one of the Israeli gas export pipelines.
The source, who requested anonymity, added that all factories particularly those owned by the government will stop production during this time and will announce the start of their annual maintenance. This will negatively affect the availability of fertilizers in the local market.
“I believe the local market will face a severe shortage of fertilizers in the coming period, and they may disappear from the agricultural cooperatives run by the Ministry of Agriculture,” the source warned, suggesting this could fuel a black market for fertilizer sales.
The government currently requires fertilizer producers to supply 55% of their output to Ministry of Agriculture cooperatives at a subsidized price of 4,500 EGP per ton. Additionally, 10% of production must be sold in the local free market, while the remaining 35% is allocated for export.
On Monday, a government official speaking on condition of anonymity, said Israel had informed Egyptian authorities that it will reduce natural gas exports to Egypt by 20% starting in June through September. The reduction is due to rising temperatures and increased domestic consumption in Israel.
Egypt began importing natural gas from Israel in 2020 under a $15 billion deal between Noble Energy (acquired by Chevron in 2020) and Delek Drilling.
Until the end of 2023, Egypt had been directing Israeli gas flows to the Idku and Damietta liquefaction plants for re-export to international markets. However, a decline in local gas production has forced the government to redirect imported gas into the domestic market to meet national demand.
Tarek Zaghloul, a board member of the Export Council for Chemical Industries, said fertilizer exports have declined significantly since the start of 2025 despite favorable global prices. He attributed this to reduced production caused by falling gas supplies.
Natural gas accounts for over 85% of fertilizer production costs. Local factories receive subsidized gas at $5.75 per million British thermal units (MMBtu) for fertilizers destined for the local market. For exports, gas is supplied based on a government pricing formula.
Zaghloul estimated a 20% year-on-year drop in fertilizer production since the beginning of this year and warned the situation is worsening.
In his comments, Zaghloul added that companies are incurring significant financial losses due to the production shortfall. He explained that manufacturers were relying on export volumes to offset losses incurred from selling subsidized fertilizers. However, the reduction in gas supplies has further harmed export capacity.
He pointed out that the cost of producing subsidized fertilizer exceeds 6,000 EGP per ton, while it is sold to the Ministry of Agriculture at 4,500 EGP. Meanwhile, the current export price stands at $400 per ton (around 20,400 EGP).
