On 9 October, Israel cut off output from Tamar, its second-largest gas field, due to safety worries. Gas exports to Egypt, suffering growing domestic consumption, are now shrouded with uncertainty.
Later, taps in Israel's oil terminal in Ashkelon were turned off to vessels as rocket attacks intensified. If the conflict spreads to include Hezbollah in Lebanon, it will exacerbate Lebanon's already acute energy crisis, according to the report.
While Israel's potential gas exports to the European Union are 15% lower than the 155bn m3 of gas Russia sold to the bloc in 2021, before the Ukraine war, Israeli gas could be useful to European governments as they seek to diversify their supplies and reduce their dependence on Moscow.
To this end, the European Union signed a memorandum of understanding with Egypt and Israel in June 2022 to ship gas produced in either country to the continent via two underutilised LNG facilities in Egypt, the Shell-operated Idku plant and Eni-operated Damietta plant.
"Increasing output from Egypt, however, would require increasing production and developing infrastructure," the report said.
Israeli government figures show "that in 2022, 63% of its gas exports went to Egypt and 37% to Jordan. The exports to Egypt, transferred from Ashkelon to Al-Arish, have increased since 2020.
Last year, Israeli gas flows to Egypt via the East Mediterranean Gas pipeline increased to 5.81 m3, from 4.23 m3 in 2021 and 2.16 m3 in 2020.
While Egypt produces its own gas and aspires to become a regional hub for that sector, it has experienced a production decline in recent years, affecting its ability to meet domestic demand and export LNG."
Raydan concluded by saying: "Over the past few years, Washington has encouraged East Mediterranean states to diversify their energy sources, all the while tackling climate change. This energy diplomacy succeeded in some places, but the Gaza war has exposed the area's high geopolitical risks."
"If the war expands, the hydrocarbon sector won't be spared the economic ramifications, and the energy plans of regional governments will be postponed for years to come."