Isranomics

Israel approves increased gas exports to Egypt from Tamar reservoir

by | Aug 23, 2023 | Economy | 0 comments

Energy and Infrastructure Minister Israel Katz has announced the approval of an increase in natural gas exports from Israel’s Tamar reservoir to Egypt. The expansion will result in the addition of approximately 6 billion cubic meters (BCM) of natural gas per year beginning in 2026, representing a significant 60% surge in production capacity over current levels.

Around 3.5 BCM of the increased gas production will be designated for Egypt. This decision follows pressure from the Egyptian government to expedite the export arrangement, as reported in Globes approximately a month ago. The expansion plan is currently awaiting a final investment decision by the partnership in charge of the Tamar reservoir.

Experts within Israel’s Ministry of Energy estimate that this boost in exports will not jeopardize the nation’s energy independence until at least 2048.

The expansion project encompasses the addition of a third transmission line from the Tamar wells to the production rig and upgrades to the existing production equipment. A substantial portion of the increased production capacity will be allocated to the domestic market, covering approximately 15-25% of Israel’s current natural gas consumption.

Minister Katz stated, “After ensuring a stable gas supply for the Israeli economy, I have authorized the additional export of gas to Egypt from the Tamar reservoir. This is a significant step that will bolster the state’s revenue and strengthen the political ties between Israel and Egypt.”

Israel is also considering other avenues for substantially increasing its gas exports. These include liquefaction options within Israel’s economic waters, liquefaction in Cyprus, pipeline connections to Turkey, reinvigorating the Eastmed gas pipeline project to Cyprus and Greece, or continued reliance on exports through Egypt.

Regarding the Leviathan reservoir, the ministry approved two phases: initially, 12 BCM, with an intended increase to 21 BCM in the second phase. However, between 2025-2027, the partners involved plan to raise production to 14 BCM, with an additional 2 BCM allocated for local consumption.

To enhance export capabilities, the partners in the Leviathan Reservoir aim to construct a floating liquefied natural gas facility (FLNG) near the rig, enabling the export of 7 BCM per year for two decades. This move necessitates a substantial financial investment, and partners have applied for the largest export quota ever requested in Israel, seeking approval for 175 BCM over 25 years. This proposal raises concerns about potential shortages and the balance between export demands and domestic needs.

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