A prolonged war might mean less exported gas to Egypt, and in turn less supply for Europe.
October 18, 2023
LONDON — Israel is managing to maintain a steady supply of gas domestically and to international customers despite the country’s conflict with the Palestinian militant group Hamas, according to Russell Hardy, chief executive officer of independent energy trader Vitol.
The US oil company Chevron ordered the shutdown of a key Israel offshore gas field after Hamas launched its surprise attack on the Jewish state on Oct. 7. The company said Oct. 9 that it had been instructed by Israel’s energy ministry to shut down the Tamar gas field off the country’s northern coast, due to the security situation within Israel after the deadliest incursion into Israeli territory since the Yom Kippur was in 1973.
The Tamar field has a production capacity of 1.1 billion cubic feet per day of gas and condensate, with estimated reserves of around 11.14 trillion cubic feet. The site is owned by Chevron, Dor Gas Exploration Limited Partnership, Everest Infrastructures, Isramco Negev 2, UAE-based Mubadala Investment and Israeli company Tamar Petroleum. It usually meets around 70% of Israel’s energy needs for power generation.
“Obviously, gas production in Israel has become material over the last few years and a lot of that gas is consumed domestically. I think they probably have a little bit of spare capacity in the system,” Hardy told the Energy Intelligence Forum in London on Tuesday.
Even after Tamar shut down, he added, “they did manage to backfill from some of the other fields, so my understanding is gas is still transferring to their customers and their international customers as well largely in an intact way.”
At least 1,400 Israelis were killed in Hamas’ attack on Oct. 7, while 3,000 Gazans have been killed since Israel launched a retaliatory air campaign. Israel is now preparing for a ground invasion of the Gaza Strip.
On Oct. 10, the International Energy Agency said that the closure of Tamar will impact Egyptian liquefied natural gas (LNG) exports. The North African country is already struggling to maintain its gas exports, and its production is declining, so it is importing more from Israel to meet domestic demand and export. Last year, Egypt imported a record of 6.27 billion cubic meters of natural gas from Israel, a 48.5% increase from the previous year.
Hardy warned that if the conflict continued for long and the Tamar site remained closed, it would reduce LNG supply from Egypt to Europe, “and then the European market will get nervous off the back of that,” he said.
Hardy also said that some of the reduced European demand for LNG since Russia slashed its gas supply to Europe amid the war in Ukraine may be here to stay.
“Gas and power had a terrible year for demand (last year) and it continues to be very difficult in Europe … on the industrial side because of the damage over the last few months of high prices,” he said. “We can expect some of that lost demand to stay lost forever.”