Gas from Israel

Ahmed Kotb , Saturday 11 Jan 2020

Egypt will soon start importing natural gas from Israel for the first time

Gas from Israel
The Israeli Leviathan gas field in the Mediterranean

The $15 billion natural gas deal signed in 2018 between the Egyptian company Dolphinus Holdings, the US-based company Noble Energy, and Israel’s Delek Drilling will come into effect by mid-January, it has been reported.

The news comes after the beginning of production at the offshore Leviathan Field on 31 December, following final approval by Israel’s Energy Ministry in mid-December for the start of production at this giant field after a court order lifted a temporary injunction granted over environmental concerns.

Although there has been no official announcement of the exact date for Egypt to start importing natural gas from Israel, several reports have suggested that this could happen in the first half of January, with Egypt receiving gas from the Leviathan and Tamar fields operated by Noble Energy and Delek Drilling.

A spokesperson for the Egyptian Ministry of Petroleum said no information was available.

Leviathan, one of the largest gas fields in the Mediterranean, was discovered 130km west of the Mediterranean port city of Haifa in 2010. It is estimated to hold 535 billion cubic metres of natural gas, along with 34.1 million barrels of condensate. Tamar, which began production in 2013, has estimated reserves of up to 238 billion cubic metres of gas.

Gas from both fields will reach Egypt through the East Mediterranean Gas Company pipeline connecting the coastal city of Askalan with the northern Sinai Peninsula.

About 60 billion cubic metres (bcm) of natural gas will be imported from Leviathan, in addition to 25 bcm from Tamar over the next 15 years. According to the agreement announced in 2018, Dolphinus Holdings will use the gas imported from the two fields to supply large industrial and commercial consumers in Egypt, as well as re-exporting some to outside markets, mainly in Europe.

According to the news agency Reuters, an amendment to the initial agreement was made in October 2019 to increase the amount of natural gas imports from the two Israeli fields to reach 85 bcm in total instead of 64 bcm, with an estimated value of $19.5 billion, $14 billion from Leviathan and $5.5 billion from Tamar.

Israeli officials have called it the most significant deal to emerge since the peace agreement was signed with Egypt in 1979.

A similar 15-year agreement has been struck with Jordan, which started receiving Israeli gas shipments from the Leviathan Field earlier this week. The $10 billion agreement was finalised between Noble Energy, Delek, and the state-owned National Electricity Company of Jordan.

Exporting liquefied natural gas from Egypt to Europe and other destinations is possible because of the processing and transportation infrastructure available through the Edco and Damietta Liquefied Natural Gas (LNG) facilities.

Egypt achieved self-sufficiency in natural gas by the end of September 2018, backed by huge gas finds and production which reached over seven billion cubic feet per day, thanks to the Zohr Field which started production in 2018 and is currently producing about three billion cubic feet of natural gas per day from 13 wells.

It then started to look into becoming a regional energy hub.

Egypt currently has two LNG facilities in Edco and Damietta. The LNG plant in Edco was launched in 2005 and is the largest project for the liquefaction of natural gas in Egypt and includes two units for liquefaction with a capacity of 4.1 million tons of gas per year for each.

The Edco plant is located about 50km east of Alexandria and is owned by the General Petroleum Corporation (EGPC) (12 per cent), the Egyptian Natural Gas Holding Company (EGAS) (12 per cent), Shell (35.5 per cent), the Malaysian Petronas Company (35.5 per cent), and the French Engie Company (five per cent).

EGAS announced in October 2019 that the amount of liquefied gas exported from Edco amounted to 172.8 billion cubic feet through 45 gas shipments during fiscal year 2018-19.

Production at Damietta’s LNG plant, located 60km west of Port Said, was halted a few years ago after the failure to supply sufficient gas feedstock, but the government announced the resumption of production at the country’s second LNG plant several times in 2019.

However, ongoing legal disputes between the operating company and the government have postponed resuming operations at the plant.

SEGAS, which operates the Damietta facility, is 40 per cent owned by the Italian company Eni, 40 per cent by the Union Fenosa of Spain, 10 per cent by EGAS, and 10 per cent by EGPC.

*A version of this article appears in print in the 9 January, 2020 edition of Al-Ahram Weekly


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