Israel will struggle to build on gas export progress

Subject

Prospects for expanding Israeli gas exports.

Significance

Israel last month commenced natural gas exports to Egypt under a 15-year contract. While the exports are important for Israel, following on from the start of exports to Jordan earlier that month and the launch of production from the offshore Leviathan field, they also contribute to building Egypt’s role as a regional gas transit hub.

Impacts

• Egypt’s gas imports from Israel will allow it to increase LNG exports from its Mediterranean coastal facilities, especially the Idku plant.
• Cairo will focus on reaching agreement with Nicosia for a pipeline to bring Cypriot gas to Egypt for liquefaction and onward exports.
• Egypt’s interest in acting as a transit point for Cypriot gas puts it at odds with Israel’s aim to promote a pipeline to Europe.
• Israeli gas imports provide Egypt with a more cost-effective solution than LNG imports to meet shortfalls in domestic supply at peak times.