BAKU, Azerbaijan, October 20. The Israeli-Hamas conflict, currently ongoing, threatens the regional natural gas market and could impact Europe's liquefied natural gas (LNG) supply in the approaching winter, Rystad Energy, independent energy research and business intelligence company from Norway, said, Trend reports.
Israel, which has surplus gas production, supports Egypt and Jordan's growing demand. However, an escalated or continued conflict carries broad implications, the agency says. Thus, the fate of major Israeli gas projects - Tamar, Leviathan, and Karish - significantly influences the regional market, potentially hindering normalization, jeopardizing investments, and disrupting export goals.
Leviathan accounts for 44 percent of Israel's gas production, with Tamar and Karish at 38 percent, and 18 percent, respectively. Tamar supplies over 70 percent of Israel's domestic gas needs and is vital for gas-fired electricity generation. Approximately 5 percent to 8 percent of Tamar's production is exported to Egypt. Egypt imports about 7 billion cubic feet of gas annually from Israeli developments, aiding domestic demand and LNG production. However, Egypt's LNG exports could be impacted by disruptions equivalent to Tamar's 33-day production shutdown, the company noted.
While Israeli gas meets less than 10 percent of Egypt's consumption, LNG exports to Egypt have decreased due to increased domestic usage in summer, raising questions about export sustainability in winter. A potential Tamar shutdown could lead to coal and fuel oil usage for electricity generation. Prolonged shutdowns may necessitate additional well drilling, delaying exports, Rystad Energy pointed out.
Jordan relies on Leviathan for gas imports, and a worsening conflict could jeopardize this supply, the analysts expect. This would impact the region, given Egypt's increased imports from Israel. Moreover, there's a risk of losing $4 billion in capital investments for upstream projects due to changing regional dynamics, potentially undermining progress in the region's energy sector.
The Tamar expansion project and Leviathan Phase 1B are particularly vulnerable to disruption. The Eastern Mediterranean pipeline, set to transport gas to Europe, faces challenges due to border disputes. While it could be profitable with low-cost gas, high costs and conflicts may discourage investors.
