EEgypt, Israel and the European Union are working toward a trilateral agreement to allow for the export of Israeli gas to Europe.
The E.U. has intensified efforts to find alternative gas suppliers since Russia’s aggression against Ukraine in February, with Israeli gas seen as a potential new source for Europe.
However, there is no setup in place to allow for direct Israeli gas supply to Europe, meaning deliveries will be facilitated via Egypt’s two LNG plants.
The Israeli Energy Ministry Spokesperson said in emailed comments to S&P Global Commodity Insights that a joint working group had been established following talks between Israel’s energy minister Karine Elharrar and EU energy commissioner Kadri Simson, with representatives from Egypt present.
The Israeli energy ministry’s Director-General Lior Schillat is leading the talks on behalf of Israel.
Schillat said “professionals from the energy ministries are working to formulate a trilateral agreement between Israel, the E.U., and Egypt, which will reflect the basic framework set in the existing agreement between Israel and Egypt in the matter of gas exports.”
“The political framework agreement will allow the gas companies to subsequently sign commercial agreements between one another,” he said.
Schillat said the only viable route to export Israeli gas to Europe was via Egypt.
Schillat also added that “a pipeline already exists from Israel to Egypt, and under the previous agreement to increase export volumes to Egypt, it may be used for additional quantities to be exported.”
“A pipeline from Israel to Europe does not exist, and therefore the most relevant option is to transport gas to Egypt, to its two liquefaction plants. From Egypt, it will be shipped to Europe as LNG, where it will be again gasified.”
Israel has become a key regional gas supplier in recent years and now exports to both Egypt and Jordan, while Egypt last year raised gas output to 71 Bcm, according to the energy ministry, up from10 Bcm year on year.
Egypt has two LNG export facilities which are the 7.2 million mt/year (9.9 Bcm/year) Shell-operated Idku facility and the smaller Eni-operated 5 million mt/year Damietta plant.
The two plants are considered key to European efforts to source additional LNG, including from Israel, which has since increased its supplies to Egypt through a new route since March.
Egypt’s LNG exports have already reached 5.6 Bcm of gas equivalent so far in 2022, with some 55 cargoes delivered to export markets.
Europe and Turkey have become the markets of choice for Egyptian LNG as European gas prices trade at a premium to spot Asian LNG prices.
Turkey has taken 15 cargoes so far in 2022, followed by Spain (eight), France (six), and Greece, the Netherlands, and the UK (two each), the data showed.
Single cargoes were also delivered to Belgium, Croatia, Italy, Malta, and Lithuania.
For most of 2021, markets in northeast and south Asia took the bulk of Egypt’s LNG until European gas prices moved to a premium over spot Asian LNG prices.
Egypt said in February that both LNG export plants were operating at “full capacity” and making the most of sustained high spot LNG prices.
The S&P Global Platts benchmark JKM price for spot LNG into northeast Asia reached a record high $84.76/MMBtu in early March.
The JKM has averaged $29.46/MMBtu in 2022 and was last assessed at $23.54/MMBtu on June 3.
Egypt is relatively exposed to spot LNG prices, so the current price strength is beneficial to the country, whose LNG exports totaled 9.5 Bcm in 2021, according to S&P Global data.
Copyright: News Central TV
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from News Central TV.