Will Israel Export Gas to Egypt?

Israel might export some of its natural gas to Egypt, said the Israeli minister of energy and water Silvan Shalom. Israel is expected to reach a decision regarding export quotas in the coming weeks. Given the proximity of the two countries, exporting Israeli gas to Egypt would be a technically simple endeavour. Israeli officials have also previously expressed the possibility of exporting gas to Israel’s Jordanian neighbour. Sales to immediate neighbours, including the Hashemite kingdom, Egypt and the Palestinian authority, would be booked as exports. Earlier in June this year, the Israeli cabinet approved a controversial plan to export 40 per cent of Israel’s natural gas and preserve 60 per cent of it for domestic use ensuring Israel will receive around 540 billion cubic meters- or enough to satisfy the country for the next 25 years. The decision brought another amendment to the previous Tzemach’s recommendation of exporting half of the gas and keeping another half for national consumption: it added that all sales, including the ones made in the region to Israel’s neighbours, would be considered as exports. The decision was contested by MKs and various political groups that argued that the importance and weight of the stakes involved should require the involvement of the knesset and that such a crucial decision must not be taken solely by the cabinet.

Israel and Jordan share a history of dependence on gas imports from Egypt. They both suffered from the disruption in the flow of Egyptian natural gas as a result of attacks to the pipeline that carried gas from Egypt to Jordan and Israel after the uprising that toppled President Mubarak from office in 2011. Jordan is currently facing a severe energy crisis from which it is trying to recover by initiating several local projects aimed at developing indigenous resources. Importing expensive fuel products to make up for the shortfall has dramatically increased Jordan’s energy bill. The Kingdom’s losses amount to USD 5.24 billion as a result of the suspension. The Egyptian Natural Gas Holding Company (EGAS) has recently said it will compensate Jordan for the suspension of Egyptian natural gas supplies ‘provided that Egypt gets enough gas to satisfy its local needs’. The company added it will resume supplying natural gas to the Hashemite Kingdom as soon as possible. Egypt's Ambassador to Jordan Khalid Tharwat said earlier that Egypt will not fail Jordan and that the continued disruption is due to technical problems. Despite Egypt’s good intentions, such a compensation is perceived with apprehension given Egypt’s own share of energy problems.

While Jordan is still energy dry, Israel was blessed with substantial discoveries of natural gas off its shores that would not only compensate the disrupted flow in Egyptian gas but also transform the country into a major natural gas exporter. Earlier this week, Israel’s High Court of Justice ratified Benjamin Netanyahu’s cabinet’s decision to export 40% of the gas, confirming the country was truly on its path to become a major energy player. The decision followed a deliberation that took place on Sunday 20 October that resulted in a 5-2 vote in favor of the 40% export quota.

Egypt is currently facing energy problems at home. While it produces 5.7 billion cubic feet of natural gas per day, it consumes 6.2 billion cubic feet of natural gas. The country cannot afford to be - and should have never been - an exporter of natural gas as it is forced to import it to make up for the gap while it attempts to develop its own fields. Whether the gas will start flowing in the opposite direction - from Israel to Egypt rather than from Egypt to Israel - is still uncertain. Israel’s ambitions to export to Jordan and Egypt make sense; both countries are energy thirsty and they are both in close proximity to Israel eliminating export routes dilemmas. Such sales would be economically wise and technically feasible. However, the moves remain politically sensitive.

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.  Follow Karen on Twitter: @karenayat