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With Egypt’s discovery of the Zohr natural gas field in the Mediterranean, it was filled with hopes of achieving self-sufficiency in gas and becoming an energy export center in the eastern Mediterranean.
The first goal was achieved in 2018 with the flow of production from the Zohr field, while to achieve the second goal, an agreement was signed in the same year worth $15 billion for a period of 10 years between 3 Egyptian, Israeli and American companies to purchase natural gas from the Israeli Tamar and Leviathan fields, and supply it to Egypt for re-export. Once again after liquefying it at the gas liquefaction stations in Damietta and Edku.
This is the agreement that Prime Minister Netanyahu described as a “day of celebration” because it will generate billions of dollars for the Israeli treasury.
Risks
At that time, some voices warned against linking the local market in Egypt, including power plants, fertilizer and cement factories, and other strategic industries, to natural gas imports from Israel.
However, the Egyptian Minister of Petroleum confirmed that the gas imported from Israel will be allocated for export after it is liquefied, without any need to consume it locally, while President Abdel Fattah El-Sisi reassured the people with his famous phrase, “We are cowardly, Egyptians, on the issue of gas.”
In practice, Egypt exported the equivalent of 270 thousand metric tons of gas only in 2020, which witnessed a decline in gas consumption in Europe against the backdrop of the closure and economic downturn accompanying the spread of the Corona virus. Then the volume of exports increased to two million tons in 2021 with the start of the global economic recovery, but it Quantity remained limited compared to expectations.
In 2021, the Egyptian government discussed several measures to increase local gas consumption instead of diesel and imported fuel, the most prominent of which is preventing the licensing of any new car unless it is converted to be suitable for using natural gas, as well as a project to convert all bakeries that operate on diesel, which number 30,000 bakeries. To work with natural gas.
Ukraine war
The war in Ukraine represented a golden gift to Egypt and Israel in the gas issue, as European countries decided to search for alternatives to Russian gas, which represents 40% of their gas imports.
The Egyptian government was quick to freeze the initiative to convert cars to run on gas, and the project to convert bakeries to run on gas.
As part of its efforts to intensify the export of gas to Europe to bring revenues in hard currency, it decided in 2022 to expand the use of diesel and diesel to operate power stations instead of gas, with the aim of exporting 15% of the gas allocated to power plants. Indeed, Egypt exported to Europe in 2022 the equivalent of 8 million tons. Gas, which brought it $8.4 billion.
These huge revenues prompted Egyptian Minister of Petroleum Tarek El Molla to declare in 2022 that his ministry is working to raise the maximum export capacity to 12 million tons of gas annually by 2025, which requires increasing Israeli gas imports with the aim of liquefying and exporting it.
Indeed, Egypt signed an agreement with Israel and the European Union last June to export more natural gas from Israel to Europe through Egyptian gas liquefaction facilities, while the European Union pledged to help finance the development of the energy infrastructure in the two countries.
Complex crisis
In 2022, Israel produced 21.9 billion cubic meters of gas, with the Leviathan field producing 11.4 billion cubic meters, while the Tamar field produced 10.2 billion cubic meters, and Israel exported 5.8 billion cubic meters to Egypt.
Last August, the Israeli Ministry of Energy announced an agreement with Cairo to increase its exports to Egypt by 31%, starting last October, which was supposed to fill the gas deficit in the Egyptian domestic market, which emerged in the middle of this year with Egyptian gas production declined from about 7 billion cubic feet per day to only 5 billion cubic feet.
It coincided with the reluctance of foreign gas companies to expand investment in new prospecting and exploration operations in light of the accumulation of their dues to Egypt amounting to between 3 and 3.5 billion dollars.
With the outbreak of the current war on Gaza, the Israeli Ministry of Energy asked Chevron, which operates the Tamar field, located 25 kilometers from Gaza, to stop production. It also decided to temporarily stop the flow of gas through the Eastern Mediterranean gas pipeline, which connects the city of Ashkelon, located 13 kilometers north of Gaza. Gaza in Al-Arish in North Sinai.
The Israeli decisions were directly reflected in Egypt, as Sameh Al-Khashin, the official spokesman for the Presidency of the Council of Ministers, announced on October 29 that the volume of imported gas had decreased from 800 million cubic feet of gas per day to zero, which led to a power outage for two hours per day in all governorates of Egypt. While outages reach 4 hours in some villages.
This was accompanied by a 30% reduction in the quantities of gas supplied to cement factories, which prompted the Egyptian authorities for the first time to import a shipment of liquefied gas from Pakistan.
Energy and water security
Although Bloomberg Al-Sharq reported on November 2 that Israeli gas imports to Egypt had risen to about 350 million cubic feet per day, electricity is still cut off for two hours per day throughout Egypt.
The Israeli decision to zero gas exports to Egypt at a time of crisis in the local market demonstrates the danger of linking Egyptian energy security to gas imported from Israel. It is a bet whose risk is expected to increase in the event of continued depletion of locally produced Egyptian gas, which indicators appear with the decline in Zohr field production from 2.76. One billion cubic feet per day to 2.3 billion cubic feet, knowing that it produces 38% of Egypt’s total gas production.
This will negatively affect strategic, gas-intensive industries such as cement, fertilizers, and aluminium. It will also affect electricity generation capabilities, as they respectively consume 25% and 57% of the total gas consumption in Egypt. Any shortage of gas will have a negative impact on the industrial sector and all citizens’ life activities, just as It is currently happening with power outages for at least two hours a day.
critical situation
A state usually links its energy security to friendly or neutral countries, because association with countries with which there is a history of hostility and disagreements allows those countries to exert political pressure and use the energy supply as a blackmail tool to meet their interests.
Likewise, Egypt’s reliance on gas imported from Israel for liquefaction and export abroad links Egypt’s plan to transform into an energy center with Tel Aviv, which is looking out for its own interests, as it is currently studying projects to build ships to liquefy and export gas directly from extraction fields in the Mediterranean to Europe, in addition to studying a project. To build a direct gas pipeline between Israel, Greece and Cyprus, which, if implemented, will represent a fundamental threat to Egyptian interests by finding alternative paths to export gas.
If we add the energy security file to the water security file, which is subject to existential threats against the backdrop of the construction of the Ethiopian Renaissance Dam, we will find that Cairo is in a critical situation in both files, which requires urgent rescue plans and the search for more sustainable alternatives to secure the country’s needs for energy and water sources without submitting to blackmail. Or fluctuations in positions from other countries.
