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The European Union is in talks with Israel to start importing Israeli natural gas that would be liquefied at an Egyptian facility, Bloomberg has reported, citing documents.
Israel has abundant offshore natural gas reserves and has been looking to expand its international presence in the gas market. Over the next two years, Israel plans to double its current production rate to some 40 billion cu m, with Europe the most logical expansion target, according to reports from earlier this year.
"The hope is to create a relatively fast working process and already during the summer to reach a framework agreement," Lior Schillat, the director-general of Israel's Energy Ministry, said earlier this month, as quoted by Reuters.
This week, the Israeli Energy Ministry announced it was in talks with the European Union, following a March meeting between Energy Minister Karine Elharrar and the European Commissioner for Energy, Kadri Simson.
According to an Israeli Energy Ministry spokesman, the EU representatives at that meeting had told the Israeli side that if they could not find sufficient amounts of natural gas to replace Russian deliveries, "they would return to coal mining, despite the great environmental damage caused by it."
Israel's proven gas reserves stood at 921 billion cubic meters before the latest discovery, made by British Energean, which found an estimated 60 billion cubic meters of gas in an offshore block. Domestic consumption, on the other hand, is not expected to exceed 500 billion cubic meters over the next 25 years, Al-Monitor reported last week.
In any case, Israeli gas will not start flowing this year, which would mean the EU would need to look elsewhere for urgent replacements for Russian gas. According to the energy ministry's Schillat, the earliest time when Israel would be able to start delivering gas to Europe via Egypt would be 2024.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
But the maximum Israel could export currently is 17.6 billion cubic meters a year (bcm/y) being produced in Egypt’s liquefaction plants of Demietta (7.56 bcm/y) and Idku (10 bcm/y).
Even if Israel manages to double its production in the next two years, total exports to the EU may not exceed 20 bcm/y and not before 2024 because of commitments in the Asia-Pacific region.
The EU will never be able to replace Russian gas supplies now or for the foreseeable future. There is neither one single LNG producer in the world nor a group of producers including the United States, Qatar and Australia capable of replacing Russian gas supplies for the foreseeable future. Moreover, LNG can never ever match Russian piped gas in price.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London