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Tuesday, 14 January 2020

Israel gas shipments could be delayed by another two months

Israeli gas shipments pushed again? Natural gas will begin flowing into Egypt this quarter, beginning with amounts of between 1.5-3 bcm a year, and gradually increasing to 4-5 bcm in 2021 and 7 bcm in 2022, Al Mal reports, citing an unnamed government source. Israeli Energy Minister Yuval Steinitz said in December that we would be seeing the first shipment by the middle of this month. This isn’t the first time since the purchase in November of the East Mediterranean Gas pipeline — thought to be the final obstacle to Israeli gas exports — that we’ve faced the prospect of further delays. A VP at Noble Energy, the operating company of Israel’s offshore fields, originally suggested that shipments would begin in December, before this was pushed back to January.

Either way, Egypt is ready after completing EGP 55 mn pipeline revamp: Preparations to repurpose the subsea pipeline connecting Arish to Israel's Ashkelon have already been completed at a cost of EGP 55 mn, and Egypt is ready for the gas to flow. The pipeline was previously used to transfer gas in the opposite direction, to Israel from Egypt. The source didn’t specify who paid for the change. It could have been the pipeline operator — East Mediterranean Gas — the companies party to the gas purchase agreement, or the government.

What will Egypt be doing with the gas? Alaa Arafa’s Dolphinus Holding, which will be receiving the gas, plans to sell much of it to local private sector companies — who would either liquify it for export in the Damietta or Idku liquefaction plants or sell it to the domestic market, the source cited by Al Mal said. This is subject to whether those companies receive distribution licenses from the Natural Gas Regulatory Authority. Egypt has moved in recent years to deregulate the natural gas grid, opening it to use by the private sector.

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