Mideast conflict dims prospect of more Egyptian LNG exports to Europe -November 08, 2023 at 02:11 pm EST

LONDON/CAIRO, Nov 8 (Reuters) – The prospect of the EU
receiving more liquefied natural gas (LNG) from Egypt in the
short and medium term looks unachievable due to tight gas
balances and reduced imports form Israel, Oxford Institute of
Energy Studies (OIES) said.

Egypt shipped 80% of its liquefied natural gas (LNG) exports
to Europe last year as the continent sought to replace Russian
pipeline gas after Moscow’s invasion of Ukraine.

The European Union has in June last year signed a framework
deal between the bloc, Israel and Egypt that would allow Cairo
to maintain “relatively high volumes” of LNG deliveries to
Europe.

Due to the Israel-Hamas conflict, Chevron in October
shut the Israeli Tamar gas field amid the military conflict in
the country and suspended exports through the subsea EMG
pipeline, which runs from Ashkelon in southern Israel to Egypt.

Gas balances at the most populous Arab country, which faces
growing demand for gas from its population of 105 million, were
already under pressure before the conflict erupted on Oct. 7 as
gas production had declined to a three-year low this year.

The country has grappled with power cuts that started in the
summer and extended to October as heatwaves have driven up
demand for cooling. High summer demand resulted in very low or
zero LNG exports in May-September.

Despite resuming LNG exports in October and November, the
report and other analysts believe that the conflict will keep
Egypt’s LNG exports under pressure.

“With tight gas balances and reduced imports from Israel,
the prospect of the EU receiving more LNG from Egypt in the
short and medium term looks unachievable,” OIES said in a
report.

“The June 2022 Memorandum of Understanding between Egypt,
Israel, and the EU, committing to higher supply, is now probably
undeliverable,” it added.

Israel’s gas exports to Egypt are part of Egypt’s supply mix
and therefore support Egyptian LNG exports.

Cairo imports about 7 billion cubic feet per year of natural
gas from the Tamar and Leviathan developments, helping meet
domestic demand and power liquefaction plants, according to
Rystad Energy.

Rystad Energy estimated that Egypt exported 3.7 million
tonnes of LNG between October 2022 and January 2023, with the
highest amount being just less than 1 million tonnes in December
2022.

According to data from consultancies ICIS and Kpler, Egypt
has exported two cargoes in October and November, but volumes
were nearly one-third of what it exported in April.

Alex Froley, LNG analyst at ICIS, said that during
October-December 2022 Egypt loaded 42 cargoes compared to only
two in that period so far this year.

“Egypt’s LNG exports look set to remain low to zero over
winter,” Froley said.

Egypt’s petroleum ministry did not immediately respond to a
request for comment.

(Reporting by Marwa Rashad in London and Sarah El Safty in
Cairo; Editing by)