CAIRO -

Energy experts ruled out that Israel's establishment of a floating station to liquefy gas extracted from the Leviathan field in the Mediterranean would affect other exporters in the region - such as Egypt - in light of the increasing global demand.

While Cairo pumps Israeli gas to Europe after liquefying it at the Damietta and Idku stations, Tel Aviv plans to liquefy the gas and sell it directly to the Europeans, hoping to benefit from the growing demand due to the Russian war on Ukraine.

Shareholders of the Leviathan gas field allocated $100 million to carry out expansions, including the inauguration of a floating Israeli gas station for the production of liquefied gas on the Mediterranean coast.

In November 2022, the Israeli company NewMed - the partner in managing the field - revealed plans to build a floating station to liquefy gas away from the two Egyptian stations, and pump it directly to Europe.

On February 21, Reuters quoted the CEO of the Israeli company, Yossi Apo, as saying, "All local and international parties are awaiting this step, and we are working hard to achieve it."

In previous statements, Apo said that the company aims to produce 21 billion cubic meters annually during this decade.

The expansion plan includes pumping $45 million initially, then spending $51.5 million to launch the floating liquefied gas station. The annual floating liquefied gas station is expected to have a capacity of 4.6 million tons, according to NewMed.

Plan for sizing the neighbors

Energy expert Dr. Muhammad Raouf Hamed told Al-Jazeera Net that all the steps taken by Israel aim in general to maximize its status and capabilities, and limit and perhaps dwarf the status and capabilities of its neighbors in general, and not a specific country.

Hamed did not address the details of the repercussions that could result from the Israeli plans, but he believes that Tel Aviv follows a scientific approach to serve its interests, secure its future, and influence the interests and future of all those around it.

On the other hand, Egyptian expert Dr. Salah Arafa told Al-Jazeera Net that the Israeli plans will not affect Egyptian gas sales because Tel Aviv's abandonment of cooperation with others is difficult.

In addition, Arafa adds, Israel does not currently have enough gas to acquire buyers who get gas from Egypt, because these buyers only conclude contracts with suppliers who have actual quantities that can be exported, and not potential quantities, since contracts are often long. term, not temporary.

exploitation of resources

Arafa believes that the Egyptian concerns are related to what is being accomplished, not to what is being planned, stressing that the bet is related to the ability of each country to exploit its resources, rationalize its consumption and provide incentives to the target markets.

According to the Egyptian expert, the Israeli side is proceeding in the right way in these matters, while some countries in the region are dealing in the wrong way.

It does not develop its fields and does not set future plans to preserve and benefit from the reserves it has, in addition to not resorting to a collective vision to deal with these challenges, he said.

Arafa concluded that these matters are ultimately linked to political understandings between countries and global actors, not to mention the cost, time and rejection of powerful Israeli environmental groups.

Tel Aviv pumps small quantities of gas to Jordan, while Egypt represents the main market for this gas, which it exploits in generating electricity and exports its gas at better prices.

The Israeli plan does not seem worrisome to Egyptian exports, as the European demand amounts to 400 billion cubic meters annually, while the increase that Israel wants to add through the project is in the range of only 9 billion cubic meters, says Simon Henderson, Baker's colleague and director of the Bernstein Program for Gulf Affairs and Energy Policy. at the Washington Institute for Near East Studies.

In an analysis he recently published, Henderson said that the operators of the Leviathan field are trying to improve the terms of the contract with Egypt by paying fees to liquefy gas only and then export it to Europe and not sell it to Egypt, noting that Washington had previously abandoned the idea of ​​liquefying gas in Israel for reasons of cost and practical application. .

The Egyptian government did not comment on this news.

Egyptian-Israeli agreements

Direct dealings between Egypt and Israel began in 2001 when the Mediterranean Gas Company - which was partly owned by the late Egyptian businessman Hussein Salem - agreed to sell 7 billion cubic meters of natural gas under a 10-year contract, worth $3 billion.

In 2005, the Egyptian state gas company agreed to sell 1.7 billion cubic meters of gas to Tel Aviv annually for a period of 20 years, at a price ranging between 70 cents and 1.5 dollars per million thermal units, while the cost of producing the same amount was 2.65 dollars. In addition to tax exemption for the first 3 years.

The agreement sparked popular protests and campaigns rejecting it and reached the courtrooms, and it was suspended by Egypt in 2012.

The agreement was concluded between the Israeli company Delek, which owns the exploration rights in the Tamar and Leviathan fields in Israel, and the "Dolphinus Holding" company in Egypt in February 2018, and it is the agreement in effect today.

In the year 2020, gas pumping resumed between the two sides again, but with a change in directions, as Tel Aviv began exporting gas to Egypt based on an agreement signed in 2018, which requires the Egyptian side to purchase 64 billion cubic meters annually from the Tamar and Leviathan fields, in the eastern Mediterranean, for a period of 10 years. years, amounting to 15 billion dollars.

The agreement was part of understandings, including Egypt's agreement in June 2019 on half a billion dollars for the Israeli side as compensation for stopping work with the 2005 agreement, after an international court ruled in 2015 that Cairo fined $760 million in favor of Tel Aviv.

In 2018, Egypt declared self-sufficiency in gas, and said that it would liquefy imports of Israeli gas and sell it to European countries, taking advantage of the price difference as part of a long-term plan to become a regional center for exporting liquefied gas.

At the beginning of 2021, the two sides agreed to connect the Leviathan field to the Egyptian liquefaction units through a marine pipeline, with the aim of maximizing natural gas resources and reserves in the region.

Last year, Israel, Egypt and the European Union signed a memorandum of understanding to export Israeli gas to Europe after liquefying it in Egypt. European Ambassador to Cairo Christian Berger said, on the sidelines of the COP 27 climate summit, that the agreement sets the framework for contracts between companies, whether private or governmental.

And last month, Reuters quoted sources as saying that this agreement requires about 3 years to enter into force.