European gas prices rise on fears of pause in Egypt LNG exports

Ahram Online , Monday 30 Oct 2023

European gas prices have spiked steeply due to a complex of factors, including reports that Israel had stopped exporting natural gas to Egypt, which could reduce the latter country's exports of liquefied natural gas (LNG).

Oil tanker. Ahram Online
Oil tanker. Ahram Online

 

European natural gas futures surged on Monday by around seven percent to the highest level since mid-February at €54 per megawatt/hour, driven by supply concerns of rising geopolitical risks, according to Trading Economics.

These risks caused a 36 percent increase in Dutch TTF Natural Gas Futures, from €36.650 per megawatt-hour (MWh) on 6 October, to €49.9 MWh by 23 October.

Natural gas prices in Europe have jumped 40 percent since the start of Israel's war on Gaza, according to data from Trading Economics.

Egypt’s LNG exports to Europe make up only a small share of the continent’s imports. Instead, the main concern is that the Israeli war on Gaza could spread to other countries in the region, disrupting crude oil and LNG traffic through the Strait of Hormuz

Last year, European natural gas prices reached astronomical heights when Russia – which had a chokehold on the continent’s gas supply – invaded Ukraine.

Egypt's gas market crisis
 

The war has already caused the closure of Israel's Tamar field in the Mediterranean Sea.

This closure brought a halt to Israeli natural gas exports to Egypt, down from 800 million cubic feet (mcf) per day, according to a previous Cabinet statement.

Meanwhile, Egyptian gas production is at its lowest level in three years, with production from the Zohr field declining by 11 percent in FY2022/2023.

Furthermore, Egypt's consumption of gas – used to generate power – rose over the past week, with a peak of 700 mcf recorded on Saturday alone; representing an 18 percent increase compared to the same period last year.

This has led the Egyptian government to increase the duration of electricity cuts due to a rise in consumption amid rising temperatures that coincided with the decreasing gas imports.

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