Revolution in Egypt May Cut Off Natural Gas to Israel

A bad end to the Egyptian crises could mean an end to natural gas exports to Israel

As if the ongoing, and increasingly  violent wave of anti-Egyptian President Husni Mubarak protests aren’t enough to cause worries about regional energy cooperation, a takeover by Muslim extremists in Egypt could spell an end to natural gas supplies to Israel. This fear, as reported in the Jerusalem Post involves Egypt’s exports of natural gas to Israel; which in 2010 alone amounted to 2.1 billion cubic meters, and worth more than $1 billion. Israel has its own natural gas stores, but it will take some years of development to exploit them.

Israel began importing large quantities of natural gas (a greener energy source than oil) from Egypt following sufficient quantities being found in Egypt’s Nile Delta and offshore after the beginning of the Millennium. Israel entered into this agreement to purchase the gas following the collapse of tentative agreements with the Palestinian Authority, regarding large amounts of natural gas that were discovered in the Eastern Mediterranean off the coast of Gaza.

If this should happen, Israel will have to be without this energy source until the offshore gas wells being developed in the offshore Tamar Gas Field and other locations begin producing. Substantial amounts of natural gas has been discovered by oil companies connected to Israeli billionaire Yitzhak Tshuva. But a combination of political wrangling by the Israeli government, as well as the possibility of mediation by the UN over claims by Lebanon (and its increasing domination by the Hezbollah) on part of Israel’s gas fields,  may result in a lack of sufficient quantities of natural gas being available from these wells until at least 2014.

According to the JPost article, last December Ampal-American Israel Corporation, which has a 12.5 percent stake in Egypt’s East Mediterranean Gas Company, signed five agreements with Israel Corp subsidiaries – Oil Refineries Ltd., OPC Rotem Ltd., IC Power Ltd., and Dead Sea Works Ltd – for natural gas supply of a total of 1.4 billion cubic meters a year for a period of 20 years.

Besides being a source of energy for both industrial and private consumption, natural gas is now being considered as a fuel source to provide energy for power plants producing electricity for the national power grid.

Israel now imports around $228 million worth of natural gas and other minerals a year from Egypt including oil.  The profits made from Egypt’s energy exports have not filtered down to the Egyptian people, however, and the result of this economic and social repression is being seen now on the streets of Cairo and Alexandria.

How this tragic episode ends, may be a bellwether  for what may happen in other Middle Eastern countries, including Jordan, Yemen, and even Saudi Arabia. As far as Israel is concerned, the loss of energy imports from Egypt is only one part of a bi-lateral relationship that has lasted 30 years and created an aura of calm on the two countries’ long shared border.

Read more on Israel and Egyptian energy issues:

UN to Mediate Natural Gas Standoff Between Israel And Lebanon

Masdar “Greens” Egyptian Sugar Refining Company by Switch from Oil to Natural Gas

Tamar Natural Gas to “Fuel” Better Place Cars

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