The government should move immediately to secure alternatives or backups to
Egyptian natural gas following the upheavals there, experts told The Jerusalem
Post this week. While they were split over how the regime change in Egypt would
affect the supply, they said it should be seen as a wakeup call for immediate
Egyptian natural gas is pumped through a pipeline from El-Arish
to Ashkelon. The gas is then used to turn turbines that produce 20 percent of
Israel’s electricity. Another 20% of the country’s electric power is produced
with natural gas from a domestic field off the coast.
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Israel-based analyst said the stoppage of Egyptian gas was merely a “technical
glitch,” a Washington-based analyst opined that it could be “the beginning of
Dr. Amit Mor, CEO of Ecoenergy, told the Post
that the current
delay was the result of missing equipment.
“According to our
understanding, the pipelines to Jordan and Israel should resume in a few weeks’
time. They are waiting for equipment that was ordered from abroad to arrive,”
Mor said by phone from Eilat, where he is participating in the Eilat-Eilot
Renewable Energy Conference.
Supplies through the Egypt-Israel pipeline
were suspended in early February after an explosion damaged a nearby pipeline
that was not part of the system. Initial estimates that the supplies would
resume by mid-February proved unfounded.
Mor, who has consulted for
governments and companies here and abroad, and worked for the World Bank for
eight years, predicted that only a takeover by the Islamists would end the
supply of natural gas from Egypt.
“As long as the regime doesn’t become
Islamist and anti-Israel, gas will be supplied. However, it will be subject to
technical availability in Egypt,” he said.
“The political risks that have
existed until now will continue to exist in this project.”
He added that
the gas supply should resume in several weeks.
However, Delphi Global
Analysis Group Founder Dr. David Wurmser was far more
“The current delays are very troubling and could be
indicative of where supply is headed. I have my doubts that the gas
supply will resume properly,” he told the Post
by phone from Washington. Wurmser
is a former senior adviser to vice president Richard Cheney and State Department
official John Bolton, as well as a former intelligence officer.
pipeline to Israel had already been attracting opposition from the
opposition. It was attacked as a symbol of normalization. Moreover, the
head of the East Mediterranean Gas Company [EMG, an Egyptian firm with Israeli
stakeholders] was close to [President Hosni Mubarak’s son and heir-apparent]
Gamal Mubarak. The army may even find it hard to continue supplying gas,” he
“The pipeline will no doubt be revisited and reinvestigated if
the delay isn’t the beginning of the end anyway, and so I think the government
of Israel’s worry is entirely appropriate,” he declared.
Wurmser will be
addressing the National Energy Conference in Tel Aviv next week.
pipeline has had a rocky history over the past decade that included a price
renegotiation following a lengthy Egyptian court battle over whether the country
was selling the gas to Israel for too little.
While Mor and Wurmser
disagreed on the resumption of gas from Egypt, both were very clear that Israel
would need to build a liquefied natural gas (LNG) terminal and floating storage
regasification unit offshore.
Natural gas can be supercooled until it
becomes a liquid.
In gaseous form it requires 600 times as much space,
meaning LNG is much easier to store. However, in order to be used, it needs to
Mor said both LNG and a backup supply of fuel oil and
diesel oil should be laid in.
“It is important to have backup plans with
an additional supply of LNG [from other countries aside from Egypt] that can be
brought in tankers and regasified offshore, as well as strategic and operational
reserves of fuel oil and diesel oil in times of gas shortage,” he
Mor stressed the importance of such measures since “gas comprises
40% of electricity production today and will increase to 70% by decade’s
According to Wurmser, the Israeli government’s thinking was to have
encouraged competition and diversified supply by pitting EMG against the
developers of Tamar. The government will have to figure out a way to reintroduce
competition to keep prices reasonable, he said.
Currently, Israel has
been receiving gas from Egypt and from the Mari-B field off
Mari-B is set to be tapped out in 2013, but if the gas supply
from Egypt does not resume, it will be tapped out much sooner, thus potentially
causing a serious shortage.
Therefore, Wurmser argued, development of
Tamar needed to be expedited and some form of LNG secured.
government needs to think through the vulnerabilities and immediately secure
additional sources either through Noa [an undeveloped Israeli gas field] or
expediting Tamar,” according to Wurmser.
The government has already
warned Tamar’s developers not to hold out for a better deal in light of the new
uncertainty, he added.
“One potential stopgap measure would be to rent a
floating LNG ship, although the government would need to secure supply and very
quickly sign an agreement, which is not a simple thing,” Wurmser
Having all natural gas flow through Mari-B also posed questions of
vulnerability, Wurmser said.
“There could be serious electricity
disruptions if there’s even a day of delays,” he said.
that in the long term, the government encourage the oil and gas exploration
sector and, especially, draw in foreign investment.
“That might involve a
strategic campaign in Washington to secure US assistance in challenging the Arab
boycott,” he said. Oil and gas companies have generally chosen to work either
with the Arabs or with Israel, but not both. So far, Noble Energy is the only
foreign company to invest in Israeli gas exploration. Noble is a partner in the
Mari-B, Tamar, and Leviathan fields.
“The financing question is deeper
and broader than just the Sheshinski Committee and Tamar,” Wurmser
contended. “It will cost tens of billions of dollars to find and develop
Israel’s potential fields, and all the fields are already 60% to 100% owned by
Israeli companies. That presents a problem because Israeli companies are
not universally up to raising that kind of money. The government needs more
incentives to lure foreign companies to Israel.”