Egypt, A Potential Export Route for Israel
Israel’s newly found offshore riches promised a new beginning away from energy vulnerability for the once considered energy-poor country. Once reliant on Egyptian imports to satisfy its natural gas domestic demand, Israel is now in a position to supply the product. In October 2014, its Supreme Court gave way to exports by rejecting an appeal against a 40% export quota decision taken by the Netanyahu Government back in June 2013.
The routes to export Israel’s gas are less obvious. Israel is situated in a part of the world historically shaken by political tensions and rivalries. The country suffered from the disruptions in the flow of Egyptian gas in the aftermath of the Arab Spring. The pipeline supplying gas to Jordan and Israel was attacked more than 15 times since the 2011 uprisings. Israel’s 10 Tcf Tamar and 19 Tcf giant Leviathan could not have been discovered at a more opportune time.
Israel’s gas wealth came not only to fill the gap in the Israeli market but also to take advantage of the momentum and bring in billions of Shekel to the economy. Israel’s immediate neighbors, Jordan and Egypt, are both suffering from energy shortages. While Jordan, like Israel, was the victim of acts of sabotage to the Arab Gas Pipeline transporting Egyptian gas to the two countries, Egypt’s national consumption is increasing by the day. Importing Israeli gas would be a relatively simple endeavor for Jordan and Egypt given the proximity of the two countries to Israel.
Egypt desperately needs a new supply of natural gas for electricity generation. Despite its own wealth of natural gas, officials failed to adopt efficient energy policies that would keep the country self-sufficient in terms of energy needs. The energy crisis hitting the country is expected to cause severe power outages by mid summer 2014 and increase the public’s frustration against the government.
The window of opportunity for Israel is larger than just selling natural gas. Egypt could also facilitate the delivery of Israeli gas to export markets - including the attractive Asian LNG market. Currently focused on satisfying its own consumption, Egypt is struggling to fulfill its burdening export obligations. Israel could use the Egyptian LNG export terminals to reach out for consumers. LNG exports offer flexibility in terms of the choice of the export markets while pipelines have to obey the regional dynamics.
Israel’s export policy is still far from being shaped. The landscape of the region is constantly changing since the introduction of the gas factor to the equation. Israel will not stop at its immediate neighbors. How it will reach further market, with Turkey, Cyprus or Egypt’s help, is yet to be revealed.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat