Our secret services have raised the alarm that gas supplies would be at risk. After the forced disengagement of most European countries from Russian gas, there were several bilateral agreements with Middle Eastern countries to guarantee supplies of gas and oil.
Some doubts are arising within the ranks of Western intelligence about the probable Russian strategic support for Hamas, at a time when the war in Ukraine has stalled. A coincidence that leads one to think that Moscow's little hand has insinuated itself into Middle Eastern affairs. The meeting in Moscow the other day with the Hamas leaders would be proof of this.
Il Secolo XIX reports the concerns of Palazzo Chigi expressed to the services by the undersecretary to the presidency of the Council of Ministers, Alfredo Mantovano"The crisis in the Middle East also worries us about the repercussions on energy supplies. For the war in Ukraine, we have laboriously switched from supplies from Russia to those coming from the South of the Mediterranean, and now everything is called into question."
Hence the executive's concerns about a possible escalation which would have effects of proportions unimaginable today, because if the war were to spread throughout the Middle East, gas and oil supplies would be at risk. Above all for the declared Italian support for the Israeli cause.
Gas analysis in the Middle East
The ongoing conflict between Israel and Hamas represents a serious threat to the regional market of natural gas and could have knock-on effects on LNG supplies in Europe as winter approaches. So in an analysis the consultancy company Rystad Energy, published on the site And Gas & Energy market.
While Israel has excess gas production, which currently supports growing demand from Egypt and Jordan, a continued or intensified conflict would have far-reaching implications.
The fate of Israel's three major gas development projects – Tamar, Leviathan and Karish – will significantly influence the regional market. The geopolitical turbulence could put upstream investments at risk and undermine export goals, at a time when exploration and discovery of low-cost resources has increased.
Leviathan accounts for 44% of Israel's current gas production, followed by Tamar and Karish with 38% and 18% respectively. Tamar provides further 70% of domestic demand of gas and is the main source of gas-fired electricity generation. It is estimated that 5% to 8% of Tamar's production is exported.
Egypt imports approximately 7 billion cubic feet, or approximately 198 million cubic meters, of natural gas from Tamar and Leviathan every year, helping to meet domestic demand and fuel liquefaction plants. Rystad Energy estimates that Egypt has exported 3,7 million tons of LNG between October 2022 and January 2023, with the highest amount of just under 1 million tonnes in December 2022. This peak production is roughly equivalent to Tamar's 33-day production shutdown at current rates.
Israeli gas currently covers less than 10% of Egypt's gas consumption, and in the first three quarters of this year, LNG exports fell by about 50% compared to last year. This decline is the result of an increase in domestic gas consumption during the summer season. Given these evolving dynamics, they arise questions about sustainability of gas exports to Egypt as winter approaches, analysts note.
"Despite the gloomy forecasts for the next winter characterized by El Niño, the current situation presents a bullish factor. The storage in the EU is currently higher to 97% and gas consumption is still below the levels recorded in 2022. Furthermore, there is the possibility of an increase in exports from the United Statesthe. The ongoing conflict is likely to have limited upside impact on gas prices in the short term, which will reflect a premium for the geopolitical risk already manifested in oil prices”, explains Aditya Saraswat, Middle East Upstream Research analyst at Rystad Energy.
"However – he continues – the risk of aescalation in a broader conflict that could cause a short-term increase in energy prices. If high energy prices lead toinflation and to a further tightening of the interest rates, could possibly correct downwards in the months to come if the economic outlook worsens on this front."
The gas field Tamar it developed rapidly over four years in response to Egypt's cessation of natural gas supplies to Israel. Tamar currently operates six producing wells, producing between 7,1 million and 8,5 million m3 per day of gas. The project played a significant role in strengthening Israel's energy independence, as mentioned by satisfying the Present in several = 70% of its needs electricity production and decreasing its dependence on coal and oil.
If the Tamar gas field is closed soon, Israel will use other fuels such as coal and fuel oil to generate electricity. However, prolonged closures could require the drilling of additional wells, which could take months, and Israel will be forced to use gas from the Leviathan field to meet your needs instead of selling it to neighboring countries such as Jordan and Egypt, explains Rystad.
Jordan gets most of its gas imports from the Leviathan field, located near Tamar, which is also the main source of gas exports to Egypt. If the conflict gets worse, it's there the risk of closingand the deposit Leviathan. This would represent a significant setback for the region, given that Egypt has recently imported almost double the volumes of gas contracted by Israel. In 2022, Leviathan exported 4,9 billion m3 of gas to Egypt, compared to 3,1 billion m3 in H2023 XNUMX.
Furthermore, there is a considerable risk of lose around 4 billion dollars in investments of capital for important upstream projects over the next three years, due to potential change in the regional landscape, analysts warn.
In 2025, the expansion project Tamar it will be the most significant of all the upstream initiatives in Israel. Of the $1,6 billion that should be invested in these projects, 75% – equal to $1,2 billion – will be allocated to expanding the Tamar field.
Leviathan Phase 1B is another considerable expansion plan, expected in 2026; $435 million in capital investments are at risk. The goal is to create an FLNG unit with a capacity of 4-5 million tonnes per year as an alternative to accessing the European market. The Leviathan field can produce up to 590 million cubic meters per day and its growth potential is approximately 19 million cubic meters per day.
Another planned investment is the Eastern Mediterranean gas pipeline that Israel, Egypt and Cyprus will build to transport gas to Europe via Greece. It is estimated to cost $6,5 billion and faces challenges due to border disputes in the region.
The project could be profitable thanks to the low cost of the gas with which it would be supplied and its capacity could be increased from 10 to 20 billion m3/year. However, investors may be discouraged from investing in the project due to its high costs and conflicts, the analysis explains.
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