Mideast Battle Dims Prospect Of Extra Egyptian LNG

The prospect of the EU receiving extra liquefied pure gasoline (LNG) from Egypt within the brief and medium time period appears to be like unachievable on account of tight gasoline balances and decreased imports from Israel, Oxford Institute of Vitality Research (OIES) mentioned.

Egypt shipped 80% of its liquefied pure gasoline (LNG) exports to Europe final yr because the continent sought to switch Russian pipeline gasoline after Moscow’s invasion of Ukraine. 

The European Union in June final yr signed a framework deal between the bloc, Israel, and Egypt that will permit Cairo to keep up “comparatively excessive volumes” of LNG deliveries to Europe.

Because of the Israel-Hamas battle, Chevron in October shut the Israeli Tamar gasoline discipline amid the army battle within the nation and suspended exports by way of the subsea EMG pipeline, which runs from Ashkelon in southern Israel to Egypt.

Fuel balances in essentially the most populous Arab nation, which faces rising demand for gasoline from its inhabitants of 105 million, had been already underneath stress earlier than the battle erupted on Oct. 7 as gasoline manufacturing had declined to a three-year low this yr. 

The nation has grappled with energy cuts that began in the summertime and prolonged to October as heatwaves have pushed up demand for cooling. Excessive summer time demand resulted in very low or zero LNG exports in Might-September.

Regardless of resuming LNG exports in October and November, the report and different analysts imagine that the battle will maintain Egypt‘s LNG exports underneath stress.

“With tight gasoline balances and decreased imports from Israel, the prospect of the EU receiving extra LNG from Egypt within the brief and medium time period appears to be like unachievable,” OIES mentioned in a report. 

“The June 2022 Memorandum of Understanding between Egypt, Israel, and the EU, committing to greater provide, is now in all probability undeliverable,” it added. 

Israel’s gasoline exports to Egypt are a part of Egypt‘s provide combine and subsequently help Egyptian LNG exports. 

Cairo imports about 7 billion cubic ft per yr of pure gasoline from the Tamar and Leviathan developments, serving to meet home demand and energy liquefaction crops, in line with Rystad Vitality. 

Rystad Vitality estimated that Egypt exported 3.7 million metric tons of LNG between October 2022 and January 2023, with the best quantity being simply lower than 1 million metric tons in December 2022. 

In accordance with knowledge from consultancies ICIS and Kpler, Egypt exported two cargoes in October and November, however volumes had been practically one-third of what it exported in April. 

Alex Froley, LNG analyst at ICIS, mentioned that in October-December 2022 Egypt loaded 42 cargoes, in comparison with solely two in that interval up to now this yr.

“Egypt‘s LNG exports look set to stay low to zero over winter,” Froley mentioned. 

Egypt‘s petroleum ministry didn’t instantly reply to a request for remark. 

GRAPHIC-Egypt LNG exports https://tmsnrt.rs/3QOSjNP

(Reuters – Reporting by Marwa Rashad in London and Sarah El Safty in Cairo)