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Sunday, 20 February 2022

The EU wants more of our gas

Egypt has held talks with the EU over shipping more natural gas to Europe amid growing concerns that conflict in Ukraine could intensify the continent’s energy shortage. EU Energy Commissioner Kadri Simson met Oil Minister Tarek El Molla on Thursday to discuss energy ties, “including in the short and medium term on LNG,” she wrote on Twitter, describing Egypt as a “key partner” for the EU. The Oil Ministry said the meeting included discussions on Egypt’s role in supplying gas to Europe and recent developments in the global energy markets in a statement following the meeting.

Concerns that Russian gas shipments to Europe could be disrupted in the event of conflict in Ukraine have forced the EU to go in search of alternative supplies: The US has ramped up gas exports to Europe and Japan will ship surplus supplies to the continent as tensions between Russia and Ukraine threaten to compound Europe’s energy shortage, which has caused gas prices to surge to record highs. The US has also reportedly held talks with Egypt and Qatar about raising exports if conflict breaks out. The drive comes as US President Joe Biden threatened to block the Russia-to-Germany Nordstream 2 natural gas pipeline if Moscow doesn’t back off Ukraine.

But Egypt appears to be running at max capacity: El Molla said at the end of last year that Egypt’s LNG export terminals were running at full capacity and are exporting the equivalent of 1.6 bn cubic feet per day.

As are European gas terminals: Europe’s LNG terminals have limited capacity to receive more supplies as the US increases shipments. “A few cargoes could be squeezed into some other countries, but not significant supply,” one energy analyst told Reuters.

Egyptian exports to Europe are on course to rise this quarter: Egypt has exported more than 1.3 bn cubic meters (bcm) of gas so far in 1Q2022, more than 1 bcm of which went to Turkey, France, Italy, and the Netherlands, according to S&P Global Platts. In 4Q2021, more than 1.2 bcm was shipped to Europe and Turkey.

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