Egypt's partnership with the EU will cover a range of fields including water management, climate action, food security and sustainable development, but it is the recent gas talks with both the EU and Israel that are grabbing the world’s attention.
The EU is now “just about days” before it can sign a tripartite agreement with Israel and Egypt to supply gas to the bloc, Várhelyi has said.
As per the agreement, gas will be brought from Israel to the EU after being liquified in Egypt, said Várhelyi on Wednesday.
“This will take us to a completely different level of partnership, Egypt becoming a reliable and long-term energy supplier for Europe,” Várhelyi stated.
The EU hopes to import at least 17 billion cubic metres of gas, Várhelyi said, noting that the tripartite agreement will hopefully be signed in a planned visit of President of the European Commission Ursula von der Leyen to Cairo in two weeks.
Von der Leyen’s visit is set to coincide with the forthcoming ministerial meeting of the East Mediterranean Gas Forum (EMGF), which has both Egypt and Israel as members, in Cairo later this month.
Bringing Egyptian gas
The EU commissioner expressed hope that Egyptian gas can also be brought to Europe through less costly gas pipelines without having to be liquified.
“That will be the next stage in our partnership,” Várhelyi said, adding that hydrogen from Egypt should then replace the gas in the future.
EU’s talks on Middle Eastern gas come as it faces pressures to diversify its energy resources amid the Russia-Ukraine war, as it received around 45 percent of its gas imports from Russia in 2021, according to the International Energy Agency.
Israeli Energy Minister Karine Elharrar has said the hoped-for agreement will pave the way for the development of infrastructure required to transport gas via Egypt to Europe.
Egypt achieved self-sufficiency in natural gas in 2018 and expects its exports of gas to reach 7.5 million tons by the end of the 2021/22 fiscal year.
Egyptian gas exports to the European continent were around two million tons in 2021, up from just 270,000 the previous year, according to data from S&P Global Platts.
Egypt's natural gas and LNG export revenues rose by 98 percent to reach $3.892 billion in the first four months of 2022, Reuters reported, citing data from the Egyptian petroleum ministry.
This is equal to the country’s export revenues of the gas and LNG throughout 2021 and is more than seven times its revenues in 2020.
Cooperation on renewable energy
Moreover, Egypt can be a major net exporter of green energy to Europe, Várhelyi said. He noted that Egypt has a huge potential to generate renewable energy that can then be used to generate hydrogen.
“That could be very easily linked to our markets and this is what we are working on,” Várhelyi said.
He added that bringing hydrogen to Europe will be a “major game changer” for the whole Egyptian economy.
There is also an opportunity to connect Egyptian electricity with the EU markets as Europe needs electricity to replace Russian gas and Russian fossil fuel, the commissioner said.
Egypt, however, has to work on developing its power capacities as the surplus of energy in the country may be turned into a deficit amid the fast growing population, Várhelyi said.
Egypt, a country with an electricity surplus of more than 25 percent according to officials, seeks to act as a regional electricity hub, exchanging electricity with nearby countries during peak demand and exporting electricity to countries in need.
In October, Egypt signed with EU’s Greece and Cyprus a trilateral agreement on power linkage a few days after Egypt signed another accord with Cyprus on linkage between the two countries’ electricity transmission networks.
After talks in Athens with Egyptian President Abdel-Fattah El-Sisi in October, Greek Prime Minister Kyriakos Mitsotakis pledged to link Egypt to the EU's energy market with an undersea cable that would carry electricity across the Mediterranean.
Minister of Foreign Affairs Sameh Shoukry has highlighted the importance of strengthening cooperation between Egypt and the EU in the field of energy, especially natural gas, LNG, electricity and the production of green hydrogen in preparation for exporting energy surpluses to Europe.
Shoukry made the remarks during a meeting with Várhelyi on Wednesday during his official visit to Egypt earlier this week.
Overcoming global crisis
Várhelyi also met on the same day with El-Sisi, during which they discussed the economic repercussions of the Russia-Ukraine crisis at the global level, especially with regards to energy and food.
The EU announced in April that it will provide Egypt a grant worth €100 million in response to the surging food prices on the heels of Russia’s war on Ukraine.
The EU has mobilised 75 million euros for expansion of wheat and storage capacity in Egypt and 25 million euros for agricultural small- and medium-sized enterprises to help Egypt tackle the global food crisis, Varhelyi said.
That funding comes as part of a previously announced 225 million euros allocated by the EU as a support package to help Middle Eastern and North African nations impacted by the crisis regarding food security.
In remarks to reporters later on Wednesday, Várhelyi said the EU is committed to help its partners amid the ongoing crisis.
“We want to help all our partners with what we have. It may be less than your needs but still a significant contribution,” Várhelyi stated.
He noted that the EU allocations in this regard aim to help partners build new capacities to store grains and help farmers grow more crops locally.
"The challenge is of the vulnerability of Egypt in the sense of being exposed very much to importing; we need to work on both the availability of new resources and availability of local production and we are partners in this,” Várhelyi added.
The commissioner expressed the EU’s keenness to provide financial support for the countries most vulnerable due to the global crisis, including Egypt, which used to import 80 percent of wheat from the two warring countries.
The EU is working to help Ukraine to bring the largest possible amounts of grains to the markets as the war is about to create a major food crisis, Várhelyi said.
Cooperation on water resources
Várhelyi’s visit to Egypt was not limited to discussing the war impacts and the gas deal; he also signed on Tuesday an agreement with the French Development Agency (AFD), and the European Investment Bank (EIB) to upgrade the Helwan wastewater treatment plant in southern Cairo.
The funding partnership aims to expand the capacity of the Helwan plant by 250,000 cubic metres per day.
The expansion will serve 2.2 million inhabitants of south Cairo with advanced wastewater collection and treatment services until 2037 and will allow the plant to tackle the overflow of wastewater that is currently harming the environmental and social situation.
The project shall significantly contribute to climate change adaptation targets through substituting fresh water used in irrigation from the Nile River with treated wastewater.
The plant will also generate renewable energy from biogas, aiming to provide 60 percent of its own energy needs, reducing the project’s carbon footprint and electricity costs.
Várhelyi told reporters that cooperation between Egypt and the EU in the water resources projects can change the lives of millions of people on the ground.
“For any future agricultural project in Egypt water is a must,” Várhelyi said, noting that the availability of water resources remains the first challenge amid the fast-growing population in Egypt.
Egypt benefited from the EU’s Neighbourhood Investment Platform through which the bloc leveraged seven billion euros in investments since 2008 for projects in various sectors including water and wastewater management and renewable energy.
Between 2014 and 2020, the EU also supported Egypt with 756 million euros through the European Neighbourhood Instrument in fields including climate action.
Cooperation on climate, COP27
Egypt is preparing to host the UN Climate Change Conference (COP27) in November this year in Sharm El-Sheikh city with determination to work with international partners to reinforce mitigation and adaptation efforts and turn climate pledges into actions.
Várhelyi told Ahram Online that the European Commission has put forward five million euros as a contribution to COP27, which he hopes will contribute to making the conference a success.
“We are reaching out to countries in the UN to make it successful and making it successful means getting everybody to long-term commitments,” Várhelyi said.
“Egypt can count on the European Union. We will do the groundwork for it to be a success,” the commissioner added.