Egypt partners with Greece, Israel to boost gas export plans
Egypt’s ambitions to become a regional gas hub received a boost last week after the Madbouly government signed agreements with Greece and Israel that could help it grow exports to Europe. The MoUs, inked during Thursday’s meeting of the East Mediterranean Gas Forum in Cairo, could see Egypt import more natural gas from Israel and increase shipments to Greece, which have failed to pick up this year despite both Idku and Damietta LNG plants being operational.
Increased gas shipments from Israel would be used for re-export, Egypt’s Oil Ministry said in a statement, stopping short of disclosing how much gas Egypt could purchase. Under the existing USD 19.5 bn agreement with Israel, Egypt is currently importing 2.1 bcm a year, which will increase to 6.7 bcm from 2023 through to 2034.
The increased supplies could be sent through a new pipeline being considered by the two countries, Israel’s energy minister wrote on Twitter. Israel’s energy ministry said last month there are discussions to establish a new USD 200 mn onshore pipeline that would connect Israel and Egypt via North Sinai. Sources at the time said that the pipeline could allow Egypt to import an extra 3-5 bn cubic meters of gas per year.
More shipments to Greece + a new pipeline could be in the cards: The MoU signed by Greece and Egypt will see the countries work more closely on LNG marketing, exploration and production activities in the EastMed, and consider setting up a new subsea pipeline linking the two countries, the Greek energy ministry said. The agreement will also lay the foundation for Greek companies to sign agreements with Egypt’s state gas company EGAS, Greek importer DEPA said following the signing.
The Egypt-Greece pipeline would come in addition to the planned link between Cyprus’ Aphrodite natural gas field and Egypt, which will allow Cyprus to export its gas to Europe via Egypt’s liquefaction facilities. The pipeline is currently expected to come online in 2024 or 2025.
Shipments to Greece have struggled to pick up this year: Greece imports most of its gas from Algeria, Azerbaijan, Russia and Turkey and has only received one shipment of Egyptian gas in 2021, despite the re-opening of the Damietta LNG plant in February and the recovery of export volumes following a difficult 2020.
A regional hydrogen trade in the making: Israel and Egypt signed an MoU that could open the possibility of using an existing pipeline to transport hydrogen between the two countries, the Oil Ministry said in its statement. Egypt is looking to capitalize on the increasing international interest in green hydrogen as an alternative source of clean energy, and has brought on board several local and overseas private sector companies to build its first hydrogen production facility in Ain Sokhna.
Good timing: The potential to ramp up exports to Europe comes at a time when spiralling global gas prices and geopolitical tensions with Russia have European nations searching for alternative gas suppliers
Egypt became a net exporter of LNG in 2018 after the discovery of the supergiant Zohr gas field — the Mediterranean’s largest — allowed us to pull the plug on LNG imports. Egypt’s LNG exports also picked up steam after we brought the Damietta LNG plant online earlier in the year following an eight-year hiatus, with at least 30 LNG shipments making their way out of the revived plant and the Idku facility since then.
What is the EastMed Gas Forum? The recently-ratified forum brings together Egypt, Greece, Cyprus, Jordan, Israel, Palestine, Italy and France to coordinate project exploration in the energy field. The organization, which is headquartered in Cairo, is now helmed by Egypt’s Osama Mehrez, who was announced as secretary general of the forum on Thursday according to Al Borsa. The forum’s next meeting is slated for June 2022 in Cyprus.