Challenges holds back increased LNG shipments from Egypt to EU
Date
11/9/2023 2:59:00 AM
(MENAFN) The Oxford Institute for Energy Studies has pointed out that the prospect of the European Union receiving increased liquefied natural gas (LNG) shipments from Egypt in the short and medium term appears unlikely due to several critical factors. Notably, Egypt is grappling with a scarcity of gas reserves, exacerbated by a reduction in gas imports from Israel. In the preceding year, Egypt was responsible for supplying 80 percent of its LNG exports to Europe, as the continent sought alternative gas sources in the aftermath of Russia's invasion of Ukraine.
While in June of the previous year, the European Union had established a framework agreement involving the bloc, Israel, and Egypt, aiming to facilitate Egypt's continued supply of "relatively large quantities" of LNG to Europe, recent developments have complicated this arrangement. The conflict between Israel and the Palestinian Islamic Resistance Movement (Hamas) prompted Chevron to close the Israeli Tamar natural gas field in October, subsequently suspending gas exports through the Eastern Mediterranean Gas (EMG) pipeline, which extended from Ashkelon in southern Israel to Egypt.
These challenges have placed considerable pressure on Egypt's gas reserves. Gas production in Egypt has witnessed a decline this year, marking its lowest levels in three years, while the nation faces a mounting demand for gas driven by its population of approximately 105 million people. The situation was further exacerbated by a power outage that began in the summer and persisted until October, primarily due to the heightened demand for cooling solutions amid heatwaves. Consequently, there were minimal to no gas exports during the period spanning from May to September.
Although LNG exports from Egypt resumed in October and November, the Oxford Institute for Energy Studies and other analysts anticipate that the ongoing conflict and its associated disruptions will continue to exert pressure on Egypt's LNG exports, thereby challenging the prospects of increased gas shipments to the European Union.
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