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Thursday, 3 October 2019

Israel to boost gas supply to Egypt by 34% after changes to landmark agreement

Israel to boost gas supply to Egypt: Dolphinus Holdings and the operators of Israel’s offshore natural gas fields Delek Drilling and Noble Energy have agreed to increase the supply of natural gas to Egypt by 34% to 85.3 bn cubic meters (bcm) under amendments to the landmark 2018 agreement, both Bloomberg and Reuters reported, citing an Israeli bourse statement.

What’s new? The value of the agreement is now USD 19.5 bn, up from USD 15 bn when the parties signed the original pact in February 2018. Exports from the Leviathan field will double to 60 bcm over 15 years and shipments from the Tamar field will fall to 25.3 bcm from 32 bcm. Gas shipments will begin flowing on 1 January 2020, through to 2034. The first three years will see a total of 2.1 bcm sold annually, before growing to 6.7 bcm a year after that. Oil Minister Tarek El Molla previously said the first shipment is on track to arrive by the end of the year.

The increased gas supply is not for export: The extra gas is going to prove useful over the coming two decades, in which time Egypt’s gas demand is expected to rise some 30%, with a supply shortage occurring in just five years, Bloomberg said, citing Wood Mackenzie research. The initial agreement had widely been seen as a way for Egypt to position itself as the East Mediterranean’s export hub, capable of shipping large quantities of the region’s LNG to Europe.

EMG pipeline ownership transfer this month: Delek, Noble, and Egypt’s East Gas have made 70% of a USD 520 mn payment to acquire a controlling stake in subsea Ashkelon-El Arish pipeline operator East Mediterranean Gas (EMG) through their joint venture EMED. The companies are expected to pay the remainder in the coming days, paving the way for the ownership transfer to be completed this month. Last year’s acquisition agreement, which both literally and figuratively provided the missing link for Israeli gas to flow into Egypt, received final approval from an Israeli antitrust regulator yesterday.

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