Egypt, Israel Agree to Export Gas to European Union

Cairo Lays First Stone in Transformation to a Regional Energy Hub

European Commission President Ursula von der Leyen looks on as EU Energy Commissioner Kadri Simson, Egyptian Minister of Petroleum Tarek El Molla and Israeli Minister of National Infrastructures, Energy and Water Resources Karine Elharrar sign an agreement during a ministerial meeting of the East Mediterranean Gas Forum (EMGF) in Cairo, Egypt, June 15, 2022. (Photo: REUTERS/Shokry Hussien)
European Commission President Ursula von der Leyen looks on as EU Energy Commissioner Kadri Simson, Egyptian Minister of Petroleum Tarek El Molla and Israeli Minister of National Infrastructures, Energy and Water Resources Karine Elharrar sign an agreement during a ministerial meeting of the East Mediterranean Gas Forum (EMGF) in Cairo, Egypt, June 15, 2022. (Photo: REUTERS/Shokry Hussien)

Egypt, Israel Agree to Export Gas to European Union

Egypt has set sail with its plan to transform into a regional energy hub after signing a tripartite memorandum of understanding in the field of gas trade, transport and export with Israel and the European Union under the umbrella of the East Mediterranean Gas Forum. With such a step, Egypt adds to the major natural gas discoveries it made over the years with new opportunities to liquefy Israeli gas in the Idku and Damietta gas terminals in Egypt and re-export it to Europe.

The signing came as Cairo hosts the seventh ministerial meeting of the East Mediterranean Gas Forum. The event was inaugurated by Natasha Pilides, Cypriot Minister of Energy and head of the current session of the forum, via video conference. The forum is moderated by Eng. Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources, who is the alternate president of the forum during 2022.

As President Abdel Fattah al-Sisi received the ministers of the countries of the East Mediterranean Gas Forum, he said that the current impact of the energy sector is on a global scale, and he confirmed the insightful strategic vision of establishing the forum years ago. Sisi added that the gas resources in the East Mediterranean are a motive for cooperation, peace and development for the benefit of the peoples of the region.

Meanwhile, Molla stressed that the signing represents a key step towards building the East Mediterranean Gas Forum, which kicked off four years ago. He added that the forum could be a building block for boosting cooperation among the member states of the East Mediterranean Gas Forum and the participants in its activities, including the EU.

As for Israeli Energy Minister Karine Elharrar, she considered the signing to be an important message for the success of cooperation under the umbrella of the Forum, which confirms its pivotal role in securing part of the energy supply to Europe. She also noted that the fruitful cooperation enables optimal utilization of the region's potential, and supports the role of Egypt and Israel as important players in the gas market.

Speaking at the Forum, Elharrar said that geopolitical events in Eastern Europe have had a strong impact on the energy industry, adding that natural gas is characterized by low emissions. She also underlined the need to play an important role in the transition to new and renewable energies, and the expansion of the use of green hydrogen as the fuel of the future.


Under the export agreement, the EU encourages European companies to participate in excavation bids in Israel and Egypt, as well as to finance the development of energy infrastructure in both countries and work with them to reduce methane emissions. Ursula von der Leyen, President of the European Commission, stressed that the signing comes at a difficult time for the Union, as it seeks securing reliable sources of energy supply in light of the current changes taking place.

Von der Leyen added that an efficient investment emphasizes the implementation of energy projects and the provision of new balanced resources to consumers, especially clean energy resources and the expansion of hydrogen use as the energy of the future. She explained that the EU is currently cooperating in the development of the hydrogen strategy in Egypt, which will be launched at the COP 27 next November and done for the sake of people around the world.


During Q1 2022, Egypt was able to export $3.9 billion worth of LNG due to the rise in international prices. This transaction added to the successes of last year when Egypt was able to export five million tons of LNG (an increase of 770%) thanks to the restart of the Damietta liquefaction plant last February. This was made possible after a settlement agreement between the several owners of the complex which had not been  operational for about eight years.

The ownership of the plant was divided between the Spanish company, Union Fenosa Gas (UFG), with a 40% stake, and the Italian company, Eni, with a 40% stake, in addition to 20%  distributed equally between the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC).

The Egyptian government had stopped the flow of gas to the plant in 2012 and diverted production to the local market due to the lack of supplies at the time.

Meanwhile, the Spanish company entered into arbitration with the government that ended with an agreement to change ownership so that the project was 50% owned by Eni, 40% by EGAS, and 10% by EGPC.

Egypt also has another LNG complex, Idku, with a production capacity of 7.2 million tons per year. It is a project in partnership between EGPC (12%), EGAS (12%), BG, which was acquired by Shell (35.5%), Malaysia’s Petronas (35.5%), and France’s ENGIE, formerly Gaz de France (5%).

Egypt imports natural gas from the Israeli fields in the eastern Mediterranean to its liquefaction plants to be compressed, then loaded on to ships and re-exported.

Through such a method, the Egyptian and Israeli gas will be transported to the EU as there are no natural gas transmission pipelines for the process. Since March 2022, the volume of Israeli gas imported by Egypt and then re-exported has increased from 450 million cubic feet per day to 650 million cubic feet per day.

Egypt ranked first in the Arab world during Q3 2021 in terms of the volume of LNG exports. Meanwhile, it held the fourth place in gas production in general during the same period at about 5.6 billion cubic feet per day, accounting for 11% of the production of Arab countries. On the other hand, Israel owns the Tamar field. Production there began in 2013 and the volume of its reserves is about 238 billion. Israel’s second field, Leviathan, discovered in 2010, contains 535 billion cubic meters of natural gas, in addition to 34 million barrels of condensate.


Dr. Rashad Abdu, an economic expert, says that Egypt will, in accordance with the tripartite cooperation with the EU and Israel, receive gas from Israel in the form of gas, provide for its liquefaction through the two Egyptian liquefaction stations, and then its shipment to Europe. He explained that the Israelis do not have liquefaction stations, nor are there natural gas transmission pipelines through which gas can be transported at present.

Egypt’s two LNG stations in Damietta and Idku boast many advantages. Having been built 18 years ago at an average cost of $250 per ton of LNG makes them unmatched by any competition, in light of the cost of building an LNG station today, which is about $1,500 per ton, especially after the price of one million units rose globally to the $8.5 level.

Abdu told Majalla that the Egyptian economy will achieve significant gains as a result of this cooperation, in terms of raising exports while boosting dollar resources. This comes in light of the current gas prices and the challenges of providing capital internally because of the Russian-Ukrainian war that has lowered tourism revenues as well as existing investments in bills and bonds, in addition to the high cost of importing from abroad. He pointed out that European countries are currently in dire need of gas, with supply chain problems arising from Russia.

Egypt has invested EGP1.2 trillion in the petroleum sector as of the end of April 2022, as part of its plan to transform into a regional hub for oil and natural gas trade and circulation. Of this amount, EGP778 billion is allocated for projects that have started operation. The current period seems favorable for Egypt to achieve its goals in the presence of a huge market such as the EU, which consumes (not counting Britain) about 560 billion cubic liters with an annual increase rate of 20%.

Khaled El-Shafei, head of the Capital Center for Economic Studies, said that over the course of eight years, Egypt witnessed 375 new gas discoveries to achieve self-sufficiency in 2018 and reclaim its position on the global map for the export of LNG. The list of countries that import from Egypt has now expanded to 20 countries.

He added to Majalla that Egypt’s imports used to stand at more than $3 billion annually. However, after the political leadership directed the need to pay attention to the discoveries, its exports have been at about $4 billion. The agreement reinforces Egypt's plan to transform into a regional energy hub, especially as the EU needs Egyptian-Israeli gas as an alternative for Russian gas.


For Medhat Youssef, former deputy head of the General Petroleum Corporation, the long-term agreement is similar to the previous agreement currently in force, with a daily supply rate of 500 million cubic feet of natural gas per day. It primarily proves Egypt's technical and logistical capabilities to assume its position as a regional hub for trading natural gas in the East Mediterranean region. Cairo has a complex network of natural gas lines, in addition to two giant liquefaction stations in Damietta and Idku, and facilities for storing, handling and shipping liquefied gas.

He added to Majalla that European countries are currently seeking to get LNG from a central point on the nearby Mediterranean Sea, and they chose Egypt due to its proximity. All the regional countries have also jumped in to sign cooperation and partnership agreements and to exploit Egypt's capabilities to export its untapped natural gas. What they lack in export capabilities, Egypt boasts an abundance.

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