Egypt Can’t Ramp Up LNG Supply To Europe Due To The Hamas-Israel War

Europe shouldn’t count on Egypt for more LNG in the short to medium term amid tight natural gas balances in the Eastern Mediterranean after the Hamas-Israel war erupted, the Oxford Institute for Energy Studies (OIES) said in a new report.

Following the Hamas attack on Israel in early October, Chevron, the operator of the Tamar gas field offshore southern Israel, shut down production at the field per instructions from the Israeli energy ministry.  

Subsequently, export flows of gas from southern Israel to Egypt through the offshore EMG pipeline were suspended, although some of those exports were re-routed through Jordan.  

“Israel’s gas exports to Egypt are part of Egypt’s supply mix and therefore support Egyptian LNG exports,” Julian Bowden, Senior Visiting Research Fellow, OIES, wrote in the report.

In the aftermath of the Hamas attack on October 7, Egypt was evaluating whether the stoppage of gas production at the Tamar field would scupper its plans to resume LNG exports to Europe as planned.

Egypt, which aims to become a regional gas hub, has been exporting LNG to Europe from its terminals on the Mediterranean with gas from domestic production and from fields offshore Israel.

However, Egypt did not export any LNG in June, August, and September, due to high domestic power demand in the summer months.

“Egyptian gas balances were already under pressure before the crisis erupted, due to falling gas production (mainly from problems at the Zohr field) and high summer demand,” Bowden noted.

“With tight gas balances and reduced imports from Israel, the prospect of the EU receiving more LNG from Egypt in the short and medium term looks unachievable,” Bowden wrote.  

In addition, the Memorandum of Understanding which Egypt, Israel, and the EU signed in June 2022 committing to higher natural gas supply, “is now probably undeliverable,” the research fellow noted.  

By Charles Kennedy for Oilprice.com

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