In the pipeline

Gamal Essam El-Din , Tuesday 1 Mar 2022

A protracted energy crisis due to the Russia-Ukraine war will boost Egypt’s natural gas exports to European and Eastern Mediterranean markets, reports Gamal Essam El-Din

In the  pipeline
New gas findings bolster Egypt s export capacity

In a cabinet meeting held on 24 February to review plans to contain the economic impacts of the Russia-Ukraine conflict on the local economy, Prime Minister Mustafa Madbouli said Egypt had achieved self-sufficiency in natural gas in 2018, and is currently planning to use its position on Europe’s doorstep to become a major supplier of liquefied natural gas (LNG) to the continent as it transitions away from other fossil fuels.

“Egyptian gas has helped meet Europe’s energy needs in recent years. Our gas liquefaction plants at Idku and Damietta are now operating at full capacity as we try to maximise our natural gas exports in light of the conflict between Russia and Ukraine and the rise in international gas prices,” Minister of Petroleum Tarek Al-Molla said.

Egypt, he continued, has the infrastructure necessary to transport natural gas, with 29 gas-treatment plants supplementing the LNG facilities at Idku and Damietta.

Tamer Abu Bakr, an Egyptian expert on the gas industry, told Al-Ahram on 26 February that increases in energy prices globally would not only allow Egypt to boost its exports of natural gas, but help attract investment to the oil and gas sector. In addition, increased demand for oil and gas is likely to result in increased traffic transiting the Suez Canal.

On Sunday, the Suez Canal Authority (SCA) announced a 10 per cent increase in transit tolls, applicable from 1 March.

“Should Russia halt supplies of natural gas to Europe due to the Russia-Ukraine conflict, European countries will have to search for alternatives, and Egypt is well placed to become one of them,” said Senator Mahmoud Mansour, assistant secretary-general of the majority Mostaqbal Watan Party.

Egypt, Mansour pointed out, is better placed than Libya, which despite major reserves is hamstrung by political instability, and Algeria, which also has reserves but lacks the necessary liquefaction plants. Mansour noted that Egypt ranked 14th globally in terms of gas production, extracting 58.5 billion cubic metres in 2020, and since 2013 has exported gas to more than 20 states.

In December, Al-Molla told Reuters that Egypt has been positioning itself as an energy hub since the 2015 discovery of the giant offshore Zohr field.

“Natural gas exports are a crucial source of foreign exchange for Egypt and our natural gas exports are now at full capacity of about 1.6 billion cubic feet per day [bcf/d],” said Al-Molla. “Egypt’s natural gas production is stable, currently ranging between 6.5 and seven billion cubic feet per day.”

At the time, he added that Egypt’s natural gas exports were expected to fall to one bcf/d by April due to regular seasonal fluctuations, and increased domestic consumption as summer began. He also noted that Egypt was planning 60-65 million cubic feet (mmcf/d) of exports to Lebanon, beginning in the summer, as part of a US-backed plan to ease Lebanon’s power crisis.

According to official figures, Egypt currently imports 450 million cubic feet of gas per day from Israel to be liquefied and re-exported to Europe. “We are seeking to raise this figure to 600-650 mmcf/d by the first quarter of 2022. Further increases will require the construction of a new onshore pipeline to the Damietta and Idku liquefaction facilities, which could be installed in 2024-25, to help pump more Egyptian natural gas to Europe,” said Al-Molla.

In November, Egypt and Israel signed a memorandum of understanding to increase natural gas supplies from Israel to Egypt, with the aim of increasing exports to Europe.

Cabinet Spokesperson Nader Saad said on Sunday that in light of the Russia-Ukraine conflict “the government is studying how to export the largest amount of natural gas to Europe in the coming stage.

“While the conflict might negatively affect us in terms of higher wheat prices and lower tourism traffic revenues, these losses could be offset by exporting more natural gas to Europe,” Saad said in a televised interview. He added that Egypt is moving quickly to consolidate its position as a major gas producer and exporter to Europe, and is “working on a joint agreement with Cyprus and Greece to export gas through linking Greek and Cypriot fields with Egyptian liquefaction stations”.

Saad also pointed to official figures showing a significant increase in Egypt’s liquefied natural gas exports, reaching 6.5 million tons in 2021, compared to 1.5 million in 2020.

The massive Zohr gas field, said Senator Mahmoud Mansour, has turned Egypt into the fastest-growing Arab exporter of LNG.

Edward Moya, a senior market analyst, told Africa Report magazine that a possible brake on Egypt boosting its gas exports to Europe is that unlike many gas-rich countries, Egypt’s domestic consumption is high.

Figures show Egypt’s current domestic natural gas consumption absorbs over 90 per cent of production.

But that, says Mansour, will change in the medium term. “Egypt,” he stressed, “aims to generate 20 per cent of its power from renewable sources by next year, and 42 per cent by 2035.

“Moreover, Egypt has the largest natural gas infrastructure in terms of gas transportation and liquefaction facilities, including two cross-border gas pipelines connecting with Israel and Jordan, making us an ideal partner for Europe in terms of natural gas supplies.”

A version of this article appears in print in the 3 March, 2022 edition of Al-Ahram Weekly.

Short link: