Experts: Israel could still export natural gas to Egypt

Following the Egyptian discovery, industry experts have repeatedly warned that Israel must quickly seal its export deals with its neighbor.

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November 24, 2015 03:26
2 minute read.
Israel’s natural gas

Israel’s natural gas. (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

 
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In light of Egypt’s recent substantial natural gas find, industry experts and government officials explored on Monday how both Israel and Cyprus might still be able to work with Cairo as they advance their hydrocarbon sectors.

“Egypt will probably become self-sufficient, but it may still need gas for its own use in the shorter term,” Dr. Charles Ellinas, CEO of the Cypriot E-C Natural Hydrocarbons Company (e-CNHC), said at the annual Israel Energy & Business Convention in Tel Aviv. “The question is – are they going to sign agreements now while they are developing their own gas?” Ellinas was discussing the possibility of Israel exporting gas to Egypt after the latter’s discovery of its Zohr field. At the end of August, the Italian firm Eni announced that it had identified the 849-billion cubic meter field, which would be the biggest in the Mediterranean if the firm’s estimates prove to be correct – significantly larger than Israel’s 621 b.cu.m. Leviathan.

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Following the Egyptian discovery, industry experts have repeatedly warned that Israel must quickly seal its export deals with its neighbor.

Last year, the natural gas companies operating in Israel’s waters signed letters of intent for the provision of 71 b.cu.m. of Tamar gas to Spanish Union Fenosa’s Egyptian liquefied natural gas plant in Damietta, and for the supply of 105 b.cu.m. of Leviathan gas to the LNG plant in Idku, owned by British Gas – which was acquired in the spring by Royal Dutch Shell.

Despite the Zohr find, National Infrastructure, Energy and Water Minister Yuval Steinitz maintains that Egypt requires additional gas for its domestic needs. He warned at the conference that if Israel continues to delay the development of Leviathan, Egypt could simply turn to Qatar or another gasrich country for imports.

Cyprus is also eager to export gas to Egypt from its 100 b.cu.m. Aphrodite field, and the two countries signed a memorandum of understanding on the subject already in February.

If Egypt does not need outside gas, Israel and Cyprus will have two markets left – Europe and Asia, Ellinas explained.

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Building a pipeline to via Turkey would require a solution to the ongoing internal conflict between Greek and Turkish Cypriots – a solution Leviathan may not be able to await.

“It may be preferable for Israel to approve two export routes for security reasons,” Ellinas said.

One of the routes could be a short-term, five to seven year deal to export gas to Egypt until the country becomes self-sufficient, he said. Israel could then begin to export to Europe in two phases – first through marine compressed natural gas (CNG) shipments to the southeastern and central portions of the continent in 2019 and later to Turkey through the future Southern Gas Corridor by around 2020-21, according to Ellinas.

Ultimately, however, Ellinas stressed the importance of developing Leviathan as soon as possible, both for Israeli domestic reasons and due to the fact that potential importers “are in the process of looking for alternative arrangements.”

Dr. Eran Lerman, a senior research associate at the Begin-Sadat Center and faculty member at Shalem College, emphasized the importance of cooperation among Israel, Cyprus and Egypt in the hydrocarbon sector. Such a partnership is also crucial toward preventing another crisis in Egypt’s domestic energy sector and maintaining the country’s stability, which is a cornerstone for regional peace, according to Lerman.

“In the next few years, there’s a window in which Israel, Cyprus and Egypt must work together,” he said.

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