Gas escalation occurred in Egypt – Kommersant

Egypt, amid the worsening Palestinian-Israeli conflict, has completely stopped receiving gas from Israel. Tel Aviv, after the unscheduled shutdown of production at the Tamar field in October, redirected resources to domestic consumption. As a result, Egypt, already facing gas shortages this year and living with daily scheduled power outages, is unlikely to be able to resume exports from its two LNG plants, which account for up to 2.5% of the world’s liquefied gas capacity. .

Egypt has completely stopped receiving gas from Israel since October 29, with supplies falling from 800 million cubic feet per day (about 22.5 million cubic meters) to zero, an Egyptian government spokesman told Reuters. He added that the authorities, amid a shortage of imported gas, will increase the duration of planned power outages, which have regularly occurred in the country since 2022 and intensified during peak demand in the summer. The majority of electricity generation in Egypt (77% of output in 2022) comes from gas-fired thermal power plants.

The preconditions for a reduction in Israeli gas supplies to Egypt arose on October 9, when the Israeli authorities, against the backdrop of a Hamas attack, ordered Chevron, the operator of the country’s second largest gas field Tamar, to suspend production. The field is located on the Israeli shelf near the Gaza Strip, and the EMG undersea gas pipeline runs from it, through which gas is supplied from Israel to Egypt. At that time, Chevron reported that export volumes to Egypt would be redirected through the pan-Arab gas pipeline, which runs through Jordan.

Egypt has been purchasing Israeli gas since 2018, mainly to feed its LNG plants in Idku (nominal capacity 7.2 million tons, operated by Shell) and Dumyate (5 million tons, operated by Eni), which were previously idle due to a lack of raw materials.

The main consumers of this LNG are the countries of Southern Europe, which agreed on additional supplies against the backdrop of a decrease in gas purchases from the Russian Federation.

However, Egypt’s growing energy needs have led to the fact that LNG supplies have been almost stopped since the summer and gas is consumed domestically. Thus, in August, only one LNG cargo was sent from Egypt, and not a single one in September. In October, two tankers managed to load at Idka before the supply cuts from Israel, and two more had to leave empty.

Back on October 27, the head of Eni’s LNG division, Christian Signoretto, said that he expects a restoration of LNG exports from Egypt in the near future, despite the reduction in gas supplies from Israel, as domestic gas consumption in Egypt declines in the fall. However, this forecast now looks optimistic. Even before the announcement of a complete shutdown of Israeli gas supplies, Energy Aspects analysts had lowered their forecast for LNG shipments from Egypt, indicating that they expected only three to four cargoes to be sent in October and the same number in November. By comparison, even at half capacity, the Idku and Dumyate plants can ship seven tankers per month. Egypt accounts for about 2% of the world’s installed gas liquefaction capacity and is an important source of supply for Europe due to its short transport distance and the fact that Egyptian LNG production increases just in time for the European heating season.

The cessation of supplies from Israel overlaps with problems with gas production in Egypt itself.

According to the latest available JODI data, the country’s production fell to its lowest level in three years in January-May, down 12% year-on-year. The decline appears to be related to the country’s largest offshore field, Zohr, where, according to Energy Aspects and Bloomberg, there were problems with seawater infiltration into one of the wells. Field operator Eni, like Egyptian officials, denied there were production problems at Zohr.

Yuri Barsukov