Egypt Gas Find Could Shake Up Israel's Energy Plans

The need to preempt Iran and export gas to Egypt was the reason the government gave to push through its controversial plan for Israel's natural gas. Now, this reason may no longer exist.

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Bedouins watch as flames rise into the air after masked gunmen blew up a terminal of the natural gas pipeline to Israel and Jordan in El Arish, northern Sinai, in a predawn attack, July 12, 2011.
Bedouins watch as flames rise into the air after masked gunmen blew up a terminal of the natural gas pipeline to Israel and Jordan in El Arish, northern Sinai, in a predawn attack, July 12, 2011.Credit: AP
Avi Bar-Eli
Avi Bar-Eli

Italian energy giant Eni announced Sunday the discovery of what is potentially the largest natural gas field in the Mediterranean, off the coast of northern Egypt. Although the precise quantity of gas is not yet known, its discovery is sure to dramatically change the market in the Mediterranean natural gas arena, especially for Israel and its commercial partners.

First of all, the potential discovery could harm the chances of development of Israel’s own Leviathan field on time, because it was supposed to have relied on Egypt as a major customer for the gas. Indeed, that was supposed to pay for the field’s development. Leviathan’s partners hoped to sign a 15-year deal to export gas to the British Gas facility in northern Egypt, which, lacking local gas, has been shuttered for a long time.

An oil rig in the Leviathan natural gas field off the Haifa coast.Credit: Albatross

The partners in another Israeli offshore field, Tamar, also hoped to export about a quarter of their gas to Egypt’s other natural gas plant, owned by Fenosa Gas, in which Eni is also a 40-percent partner.

To close the latter deal, worth an estimated $15 billion, the cabinet approved a controversial benefits package, including an early permit to export the gas, which was key to the compromise agreement between the government and the field partners, Delek Group and Noble Energy.

The government said approval of the plan had to be expedited for economic and geopolitical reasons – mainly the need to export gas to Egypt. Now, though, this reason may no longer exist. The security cabinet had approved the compromise based on the determination of the Foreign Ministry that Israel needed to export gas to Egypt to maintain its interests in the area.

Minister Steinitz, holding data relating to gas prices, and PM Netanyahu at a recent cabinet meeting.Credit: Emil Salman

As reported in TheMarker, the Foreign Ministry said Iran had expressed a willingness to fill the energy vacuum left by Egypt and become Jordan’s gas supplier, as well as Egypt’s supplier in the long term. The Foreign Ministry made this claim despite the slim chances that Iran would export gas to the region, and contrary to the forecast that Egypt itself was expected to once again become an exporter of natural gas in the coming years.


Eni claimed Sunday that its find could be one of the largest natural gas fields in the world. The discovery was made in the offshore Zohr field, at about the same water depth as Israel’s Leviathan field – 1,450 meters (4,757 feet).

According to Eni, the “supergiant” field, which extends across 100 square kilometers, might hold 30 trillion cubic feet of gas. This is 40 percent more than the quantity in Leviathan.

Jan. 20, 2015 file photo, Italian energy giant Eni CEO Claudio Descalzi.Credit: AP

Surprisingly, the Egyptian government’s plan to develop its own natural gas, and its success in persuading foreign investors to return to Egypt, didn’t appear in the position paper the Foreign Ministry prepared, which was presented by the ministry’s newly minted director general (and Prime Minister Benjamin Netanyahu’s close associate), Dr. Dore Gold.

The fact that this aspect was not presented was also surprising because Eni has been operating in Egypt since 1954, and recently joined the Egyptian government’s investment program in natural gas and oil exploration, signing an agreement in principle for investments of $2 billion.

Israel’s National Security Council, also subservient to the prime minister, went even further, claiming – through chairman Yossi Cohen – that Egypt wouldn’t be able to supply natural gas to its shuttered northern facilities. As a result, there would be no risk to the export contracts with Tamar and Leviathan. He also reiterated the urgent need to approve Israel’s export contracts.

“The discovery in Egypt pulls the rug out from under the already weak reasons for invoking Clause 52 of the Antitrust Law for diplomatic and security reasons – first and foremost because the strategic alliance with Egypt requires urgent export of Israeli gas to Egypt,” MK Shelly Yacimovich (Labor) said Sunday.

“It turns out that Egypt doesn’t need our gas, and the government must now produce a reasonable and sane plan without fabricated panic and imaginary security reasons,” she added.

Yacimovich said that if the Egyptian discovery was real, “it’s likely that gas prices will plummet because of regional competition. Clearly it is absolutely wrong that Israel imprison itself for a whole decade in draconian contracts at exorbitant prices.”

However, Energy Minister Yuval Steinitz reiterated his position Sunday that Israel must approve the gas plan, because “the discovery of the field in Egypt is a painful reminder that while Israel was ‘asleep on its feet’ and delaying final approval of the natural gas plan and delaying further exploration, the world changed before our eyes, including implications for export possibilities.”

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