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Thursday, 26 May 2022

Egypt, Cyprus to break ground on gas pipeline this year -El Molla

Construction of the pipeline connecting Cyprus’ Aphrodite natural gas field to Egypt will begin by the end of the year, Oil Minister Tarek El Molla told Bloomberg Asharq yesterday at the World Economic Forum (WEF). The planned pipeline will allow natural gas from the field — estimated to hold as much as 4.5 tn cubic feet of natural gas — to flow to Egypt’s liquefaction facilities at Idku and Damietta for processing and shipment onward to Europe and elsewhere as liquefied natural gas (LNG).

The pipeline is expected to be up and running by 2025, El Molla said, adding that both countries’ parliaments have signed off on the plan. That’s just about what the industry expected: Gas flows from the field had been projected to start by 2024 or 2025.

Who’s involved? Israeli energy company NewMed Energy and Chevron are developing the Aphrodite gas field in partnership with Shell. We don’t yet know which companies are being brought on board to build the pipeline itself. NewMed and Chevron which are also the joint developers of the two Israeli gas fields that already supply our LNG plants.

The project is more important than ever in light of the war in Ukraine: The east Mediterranean could become one of the EU’s most important sources of natural gas in the coming years as it looks to wind down imports of Russian gas, which currently provide 40% of the bloc’s consumption. In a plan released last week, the EU said it will invest EUR 12 bn in pipelines and LNG facilities to increase gas supplies from other producers such as Egypt and Israel.

Egypt is on board: “We have ambitious plans to coordinate with neighboring eastern Mediterranean countries on meeting the increased demand from the EU — and the world — for LNG over the next few years,” El Molla said. The minister said earlier this week that Egypt will be in a position to increase exports to Europe in the next two or three years.

We’ve been working to boost our energy ties with our neighbors for some time: The Cairo-based East Mediterranean Gas Forum brings Egypt, Greece, Cyprus, Jordan, Israel, Palestine, Italy and France together to work on developing regional gas assets. The Madbouly government also late last year signed agreements with Greece and Israel laying the groundwork to up import and re-export volumes.

Rising summer consumption curbs exports: Egypt is currently exporting around 1 bn cubic feet of LNG per day — down from exports of 1.6 bn cubic feet per day back in December, when the Idku and Damietta LNG plants were running at maximum capacity. Shipments had been expected to fall to 1 bcf/d by this summer due to rising domestic consumption.

We won’t raise LNG exports back to last year’s levels for some time: The government plans to bring exports back up to 1.5 bcf/d over the next couple of years, El Molla said yesterday.

And some projects to add capacity have been delayed: Plans to develop some local refineries have been pushed back to FY 2023-2024, El Molla said, without clarifying which projects he was referring to.

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