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Egypt expects boost from gas deal with Israel and EU

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CAIRO — The European Union, Israel and Egypt signed an agreement on June 15 to boost the export of natural gas from Israel to Europe via Egypt.

The signing of the agreement took place during the 7th Ministerial Meeting of the Eastern Mediterranean Gas Forum (EMGF) held in Cairo.

Egyptian Minister of Petroleum and Mineral Resources Tarek el-Mulla said in a statement at the signing ceremony that the agreement is a very important step that can be built on to promote cooperation between member states. of the EMGF, including the EU.

Israeli Energy Minister Karine Elharrar said the agreement is an important message about the success of cooperation under the EMGF umbrella, which underlines its central role in securing part of the Europe’s energy supply. The fruitful cooperation would allow optimal use of the region’s resources and position Egypt and Israel as important players in the gas market, she continued.

EU Energy Commissioner Kadri Simson said the deal was an opportunity for all to cooperate, especially as the signing of the deal comes at a difficult time for the EU, which is seeking to ensure a reliable energy supply.

The tripartite agreement comes as Europe seeks to meet its gas needs from eastern Mediterranean resources as part of a plan to reduce dependence on Russian gas imports which have been affected by the Russian invasion of Ukraine.

Under the deal, the Israeli gas will be transported by pipeline to liquefaction plants at the Damietta and Edco plants on Egypt’s Mediterranean coast, before being exported to Europe.

Charles Ellinas, a nonresident senior fellow at the Atlantic Council Global Energy Center, told Al-Monitor that the EU is seeking to cut Russian gas supplies by two-thirds by the end of 2022 and end its dependence on Russian fossil fuels by 2027.

He said the recent deal is an opportunity for Eastern Mediterranean gas to fill the void for Europe.

Ellinas noted that the most optimal and fastest way to increase the volume of Eastern Mediterranean gas exports to Europe is through Israel’s new Leviathan offshore natural gas field, where production is currently in progress. ongoing, and by the existing liquefaction plants in Egypt and their operation at maximum capacity.

He explained that the gas liquefaction plants enabled Egypt to respond immediately to Europe’s needs. “It fits perfectly with Egyptian aspirations to become a hub for the export of gas from the Eastern Mediterranean to Europe. However, given Europe’s plan to massively increase green energy, the need for gas imports will decrease as we get closer to 2030,” he said.

Ellinas added: “In the long term, it is possible for Egypt to supply Europe with green hydrogen, given that Egypt is the country most capable of meeting European hydrogen needs in the Eastern Mediterranean. Additionally, the abundance of solar and wind power and a number of green hydrogen projects that are currently under development put Egypt on the right track.

He said these projects are an opportunity for Egypt to become a regional leader in the production, use and export of green hydrogen and ammonia.

Egypt is seeking to attract more foreign investment in the green hydrogen production sector. On April 20, the government approved additional incentives for investment in this area.

Maher Aziz, a member of the World Energy Council, told Al-Monitor: “Cooperation among Eastern Mediterranean countries in gas export has been on the table since the formation of the EMGF, which the Egypt sought to establish in order to strengthen its position as an energy supplier. hub of the region.

He said: “The Russian-Ukrainian war, which cast a shadow over Europe’s natural gas supply, showed the backwardness of cooperation between Eastern Mediterranean countries to supply Europe with natural gas. “.

Aziz noted: “If this cooperation had been established two years ago, gas exports to Europe would have brought huge profits to Eastern Mediterranean countries today, especially in light of the surge in world gas prices.

He added: “The opportunity always presents itself, and it is good to start implementing this cooperation on the ground. This could position the Eastern Mediterranean countries as a main hub for gas supplies to Europe, which imports more than 30% of its consumption from Russia. It would also help the Egyptian project to become a regional energy hub. »

According to Elharrar, the agreement signed between Israel, Egypt and the EU is valid for three years and will be automatically renewed for an additional two years. She added, during the signing ceremony, that the agreement amounted to a commitment to share natural gas with Europe and contribute to the energy crisis.

As part of the agreement, the EU will also encourage European companies to participate in exploration tenders in Israel and Egypt. The agreement also provides for the formulation of a plan for the optimal use of the infrastructures linked to the extraction, liquefaction and transport of natural gas.

Aziz said: “Eastern Mediterranean countries have enough natural gas to meet their domestic needs and to export abroad. According to the US Geopolitical Survey, the Eastern Mediterranean has a proven reserve of up to 345 trillion cubic feet of natural gas. This is a huge quantity capable of supplying Europe with gas for the next 20 to 25 years.

Speaking to Masrawy News on June 15, Osama Kamal, Egypt’s former oil minister, said the gas export deal would bring economic and political benefits to the Egyptian state.

He said that Egypt will benefit from gas transit fees and liquefaction fees, and that the agreement will allow Egypt to play a strong and influential political role between certain parties or countries in the Eastern Mediterranean who know gas disputes, including the dispute between Lebanon and Israel.