Israel, Egypt plans gas pipeline expansion

The Israeli government has greenlighted a plan to enhance infrastructureas networks for transporting natural gas to Egypt, according to a report by the Globes newspaper. The project involves the construction of a 65-kilometre pipeline running from Israel to the border of the Sinai Peninsula. The aim is to expand the volume of gas supply to Egypt and Europe, the latter suffering from energy shortages arising from the Ukrainian crisis. The pipeline can move 6 billion cubic meters of gas each year, worth around $57m, and costs an estimated $257m to build.

The Israeli gas transported by the pipeline is not intended for Egyptian consumption since the Arab nation can meet its domestic needs through its own sources. The Israeli gas is instead turned into liquefied natural gas (LNG) at Egyptian facilities before shipping to Europe. In June 2022, Israel and Egypt signed a memorandum of understanding with the EU that allowed “significant” exports of Israeli gas to Europe.

The deal anticipated that Israel would have a surplus of up to 10 billion cubic meters per year of gas, which it extracted from the Karsh gas field, starting in October 2022, and a further 9 bcm surplus from expected increases in production from the Leviathan gas field. Existing pipelines connecting Egypt and Israel can transport only 7 to 10 bcm annually, necessitating the expansion of the existing pipeline network.

The EU relied on cheap Russian gas, including through the Nord Stream 1 pipeline, but sanctions and the war between Russia and Ukraine, beginning in February 2022, disrupted the supply. The EU lost 155 bcm of gas from Russia in 2021, 40% of its annual consumption, and it turned to other sources to meet its gas needs. Europe began importing large amounts of LNG from the US, which is more expensive to produce and transport than Russian gas by pipeline. The resultant price rise in natural gas made the export of Israeli gas to Europe profitable after being turned into LNG in Egypt.

The expansion of the pipeline network and Israel’s anticipated increase in gas production from its gas fields will provide additional gas to meet the high demand from Europe. Despite the geopolitical tensions and environmental concerns surrounding the development of gas fields, Israel continues to promote its energy exports.

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