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Tuesday, 17 May 2022

Israel wants to fill Europe’s gas supply gap — and Egypt could be key to the plans

Israel hopes to sign agreements to up its gas supply to Europe “in the coming months,” Reuters reports, as the continent continues its search for alternatives to Russian fossil fuels. Israel is set to double its gas production to reach around 40 bn cubic meters over the next few years, the newswire cites unnamed industry officials as saying.

Egypt could be key to the plans, since the quickest route to get Israeli gas to Europe is by shipping it to our liquefaction facilities for re-export, Reuters cites gas consultant Gina Cohen as saying in a report sent to the Israeli foreign ministry and the European parliament.

REMEMBER- Israel currently ships gas to Egypt via the Eastern Mediterranean Gas pipeline that runs between Ashkelon and Arish, which has an approximate annual capacity of 7 bcm. The country in March began exporting gas to Egypt via the Arab Gas Pipeline for the first time, with exports targeted at 2.5-3 bcm this year, potentially increasing to 4 bcm in the future.

We want more: The Madbouly government has been looking to increase the amount of gas it imports from Israel for re-export to Europe, and late last year signed agreements with Greece and Israel laying the groundwork to up import and re-export volumes — though it remains unclear whether we or Europe have capacity to up gas trade in the immediate future. Energean said last week that it could sell 8 bn cbm a year to us after it discovered a new gas field off the Israeli coast.

But there’s a chance Israeli gas to Europe could one day (partially) bypass us: Israel is also considering building a floating liquefied natural gas (FLNG) facility, which would give it independence from transit countries; a direct pipeline to mainland Europe like the mooted EastMed pipeline linking Israel, Cyprus, and Greece; or a shorter pipeline to Turkey, though Turkish authorities have said that won’t be a possibility anytime soon.

Why we’re still the best option: Pipeline infrastructure takes time and a whole lot of investment to build, and Israel needs to move fast if it wants to capitalize on Europe’s gas supply gap. “Israel must act as quickly as possible as the window to sign contracts and become a significant gas supplier to Europe will only be opened for a limited time,” Cohen said. Israel’s Energy Minister previously said it could take until 2024 to significantly up exports to Europe.

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