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Rising Oil Bill May Erase Egypt's Savings From Gas Milestone

  • Egypt faces hit to budget from oil after ending imports of gas
  • Government was planning to phase out costly fuel subsidies
Men watch a Liquefied Natural Gas (LNG) tanker as it sails on the Suez Canal in Ismailia, Egypt, in 2007.

Photographer: Dana Smillie/Bloomberg

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No sooner has Egypt achieved its milestone of regaining self-sufficiency in natural gas than another corner of the energy market threatens to deal a new blow to fragile government finances.

A six-fold increase in production at the giant offshore Zohr field means Egypt can now meet its own needs domestically. The government may now save some $2 billion a year after receiving what it said was the final shipment of expensive liquefied natural gas last week. But relief for the most populous Arab country -- a net importer of refined gasoline and diesel -- could be short-lived.