Israel, Egypt and the EU sign gas deals

Israel, Egypt and the EU sign gas deals

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TEL AVIV – Israel, Egypt and the European Union signed a trilateral gas deal in Cairo on Wednesday as Europe scrambles to cobble together an energy strategy to replace the Russian supplies it has relied on for decades.

The deal, in the works since March, will allow Israel to streamline and increase exports of its natural gas through already existing pipelines to Egyptian ports, where it can be pressurized and liquefied and then shipped to Europe.

“This will contribute to our energy security. And we are building an infrastructure that is suitable for renewable energy – the energy of the future”, Ursula von der LeyenPresident of the European Commission tweeted from Cairo on Wednesday with a photo of the signing.

Israel had promised in recent weeks to ramp up its gas production as demand grew and prices rose. It intends, in cooperation with other Middle Eastern countries, to sell Europe, which was previously the largest buyer of Russian energy.

Israel, once energy dependent, is a new major gas producer

“With the start of this war and Russia trying to blackmail us with energy by intentionally cutting off energy supplies, we decided to cut and get rid of dependence on Russian fossil fuels and move away from Russia and diversify into trusted suppliers von der Leyen said Tuesday night at a joint press conference with Israeli Prime Minister Naftali Bennett in Jerusalem, at the end of a two-day visit to Israel and the West Bank. “This is an outstanding step that takes our energy collaboration to the next level.”

Italian Prime Minister Mario Draghi also met Bennett on Tuesday to discuss energy cooperation. Claudio Descalzi, the head of Italian oil giant Eni, said last month Italy aims to be completely independent of Russian gas by the winter of 2024-2025. On Wednesday, Eni announced that the Russian state-owned company Gazprom had cut its gas supplies to Italy by 15 percent. Since Russia invaded Ukraine in February, Italy has signed deals with several energy-exporting African countries, including Egypt.

For Israel, the sudden energy shortage in Europe is an opportunity to get involved in a global market that has become exponentially lucrative in recent months.

“This is a tremendous moment as little Israel becomes a major player,” Israeli Energy Minister Karin Elharrar said in a statement on Wednesday.

Experts say Israel’s supply, derived from three offshore gas fields in the Mediterranean, will be nowhere near Russia’s capacity. Israel produces about 12 billion cubic meters of natural gas annually, although industry analysts say there are at least twice that amount in untapped reserves. In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia, accounting for about 45 percent of EU gas imports.

But Alex Coman, an energy expert at Tel Aviv University, said Israel’s contribution will become increasingly important as the war in Ukraine pushes Europe towards a “more fragmented strategy” in which it will buy smaller amounts of energy from a number of different countries.

“Beyond the war in Ukraine, Europe is so traumatized by Russian brutality” that it has moved into a general restructuring of its energy system “to avoid dependence on one energy source,” he said.

In May, London-based exploration and production company Energean announced that it had made a new commercial gas discovery of about 8 billion cubic meters off the coast of Israel. The development project is scheduled to go online in September.

Energean CEO Mathios Rigas said that more pipelines were needed to fully exploit the eastern Mediterranean’s offshore reserves and that “Europe needs gas today, there are no magic solutions”.

Beyond infrastructure, he said, in a region that has been riddled with conflict for decades, the industry is challenged by both “below the surface — the rocks, the geology — and problems above ground, disputes.”

Those issues surfaced this month when Lebanon protested the arrival of one of Energean’s floating rigs, claiming that the gas fields in question are within its territorial waters. Israel said the area is within its exclusive economic zone. Lebanon is expected to drop calls for a meeting in Beirut this week with senior US energy security adviser Amos Hochstein, according to officials speaking to Reuters news agency.

The export deal on Wednesday comes a day after Russia’s state-owned Gazprom announced it would reduce the capacity of the Nord Stream pipeline – the largest gas supply link to the EU – by 40 percent after repair delays and hike already elevated natural gas prices by 15 percent.

The EU has worked with the United States and other allies to impose sanctions on Moscow, but several member countries remain heavily dependent on Russian oil and gas.