Egypt and Israel are considering connecting their gas grids through a new USD 200 mn onshore pipeline that would run through North Sinai, the Israeli energy ministry said in a statement to Reuters on Thursday. The pipeline, which will be owned by Israel Natural Gas Lines, could be operational within two years and is expected to boost exports by 3-5 bn cubic meters (bcm) annually, the newswire reported, citing industry sources.

One of several options: “Israel and Egypt are holding talks on possible cooperation in the supply of natural gas. One of the options being studied, following a request by Egypt for further natural gas supplies, is an onshore gas pipeline,” the ministry said.

The pipeline could eventually boost supplies to Europe, where supply shortages and a surge in demand have resulted in soaring gas prices.

Egypt became a major importer of Israeli gas in 2020 under a USD 19.5 bn agreement inked by the two countries in 2019 that will see the country purchase 85.3 bcm of gas by 2034.

The Sinai pipeline would not affect plans to lay a second subsea pipeline that could double Israel’s gas exports to Egypt, the sources said. Israel gas firm Delek Drilling in January announced plans to establish a new USD 235 mn Mediterranean pipeline, which Israel’s energy minister said could have an annual capacity of 10 bcm.

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The US has promised not to penalize Egypt for shipping natural gas to Lebanon through Syrian territory, Lebanon’s energy minister said on Wednesday, according to Reuters. Cairo last month agreed to send emergency shipments of gas to Lebanon, which is experiencing crippling power shortages brought about by a devastating economic and financial crisis. The gas will be sent through a pipeline crossing Syria, which could have exposed the Egyptian government to sanctions under Washington’s Caesar Syria Civilian Protection Law, legislation introduced last year to deter countries from doing business with the Assad government.