Egypt To Import Gas From Israel

Agreement between private parties symbolizes shift of the energy powerbase in the Eastern Mediterranean
By Toyin Akinosho

The non-binding Letter of Intent (LOI) between the partners of Tamar field, offshore Israel and Union Fenosa Gas SA (UFG) effectively means that Israel may soon be exporting gas to Egypt.

Which is a symbol of extreme irony. Just two years ago, Egypt cancelled a 20-year natural gas supply contract to Israel, a move which hurt Israel deeply and was widely interpreted as evidence of fraught relations.  At the time, Egypt supplied 40% of Israel’s natural gas.

But to say that tables have turned is not exactly as clear as it seems.

Union Fenosa Gas SA operates a Liquefied Natural Gas plant in Egypt which has witnessed challenges of gas supply on account of increased domestic use of Natural Gas in the North African Country. So, while the supply of gas from the Tamar field is meant solely for liquefaction and export, it still comes to Egypt from Israel.

Noble Energy, which leads the Tamar Field partners, says the intent is to dispatch as much as 2.5 trillion cubic feet of gas from Tamar to the Egyptian LNG plant over 15 years. This is approximately 440 million cubic feet per day over the period.

The discovery of Tamar (estimated at 10Trillion cubic feet in size), off the waters of Israel, in January 2009, has spawn a change in who controls the energy dynamics in the east Mediterranean.

Just six years ago, Egypt was at the heart of things: it supplied 200MMscf/d of gas to Israel, provided energy starved Jordan with the fuel, and was committed to supplying Syria and Libya with gas for 30 years. It was also working to provide 150MW of gasfired electricity to Palestine.

Today, it is the Tamar partners who have signed agreements to supply Israeli gas to the Palestinian Power Generation Company. Noble Energy and Co now talk excitedly about accelerating value and strengthening  “economic growth for stakeholders across the Eastern Mediterranean region”, with Israeli gas, of course.

Meanwhile, Egypt is gradually unable to supply its gas to anyone other than its own citizens. The Egyptians are the largest gas guzzlers on the continent, fueling over 20,000MW of power plant with natural gas and running one of the world’s largest Compressed Natural Gas sectors.

The Tamar field partners don’t have the sort of political decision that the Egyptian government had to make, in terms of subsidizing its domestic gas supply even while it diverts from the market driven export supply. “The price for the natural gas sold will be similar to the contract price in other natural gas sales and purchase agreements for regional export sales from Israel and is based mainly on a linkage to Brent oil prices.  All parties are targeting to finalize a binding agreement within a period of six months, which will be subject to the receipt of regulatory approvals in Israel and Egypt”, Noble Energy says.

Noble Energy operates Tamar with a 36% working interest. Other interest owners are Isramco Negev 2 with 28.75%, Delek Drilling with 15.625%, Avner Oil Exploration with 15.625% and Dor Gas Exploration with the remaining 4%.


No comments yet.

Leave a comment

Comment form

All fields marked (*) are required

© 2021 Festac News Press Ltd..