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Tuesday, 12 February 2019

All set for Israeli gas coming to Egypt except one little thing: Israel has no enough pipeline capacity

Israel is struggling to find a way to export its gas to Egypt. The southern Israeli gas pipeline that is meant to carry gas from the Leviathan and Tamar fields to the East Mediterranean Gas (EMG) pipeline into Egypt does not have the capacity to carry the volumes the fields’ partners have contracted to sell to Egypt, Haartez reports. Under the USD 15 bn contract with Dolphinus Holdings (a group fronted by the industrialist Alaa Arafa), Delek Group and Noble Energy should deliver 3.5 bcm from each field for a combined total of 7 bcm — but the Israeli pipeline’s current capacity does not exceed 3 bcm, the Israeli newspaper says. “Israel’s Natural Gas Authority added to the problem after it made clear that the pipeline couldn’t handle even that amount. In an announcement, the authority said that it couldn’t promise continuous access to the pipeline, but only when capacity was available.”

Background: Reports emerged earlier this year that Egypt and Israel were in early talks to build a new underwater natural gas pipeline to get around the capacity restrictions posed by Israel’s domestic pipeline network. The new pipeline could also pave the way for future deliveries of Israeli natural gas to Egypt when Leviathan is operating at full capacity. Dolphinus’ import agreement paved the way for Noble Energy and Delek, along with their Egyptian partner East Gas, to acquire a 39% stake in EMG — a crucial milestone in Egypt becoming the regional export hub for the East Mediterranean gas fields. International arbitration cases were settled to pave the way for the deal and Israel expects imports to begin in a few months’ time.

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