EU Urges Egypt to Keep LNG Export Levels Steady

CAIRO [Europe]: The European Union has put forward plans for a framework involving Israel, Egypt and the bloc itself which could see Egypt maintain consistent levels of liquefied natural gas (LNG) deliveries to Europe. The proposal was announced on Monday by the EU's Energy Commissioner who expects the deal to be finalized soon.

"Now we have to solve some of the bottleneck issues," Kadri Simson, EU commissioner for energy, stated.

"We do expect that, with the help of this MoU (memorandum of understanding), Egypt can keep the relatively high volumes of LNG that it delivered to Europe last year."

Egypt is expected to produce 7.5 million tonnes of (LNG) this year, according to Petroleum Minister Tarek El Molla. He made the announcement at a conference and noted that the country already shipped 80% of its LNG to European countries in 2022.

Last year, data from Refinitiv showed that Egypt's exports of (LNG) to Europe, including Turkey, were below 70%. The cause for the difference was uncertain. Molla commented that LNG plants were functioning at a lower rate than their potential and could be increased.

"They are there prepared for the time when we make the decision to increase their capacity to double or triple," he stated.

Last June, Egypt and Israel signed a Memorandum of Understanding (MoU) to increase the export of Israeli gas to Egypt's two liquefaction plants. From there, this gas would be transported north to Europe. Through this initiative, Egypt is looking to establish itself as a major energy hub in the region, drawing on its combination of gas production from its own fields and imported gas from Israel.

Egypt has seen a rise in domestic demand and infrastructure constraints that have limited its gas available for export. Nonetheless, the country has been trying to save gas for export to offset their acute dollar shortage because of an increase in European demand and prices due to the war in Ukraine. Officials have noted it will take time before any significant expansion in export capacity under the deal with the EU and Israel can be executed.

A major surge in exports could be achieved if plants are modified or new production chains established, according to an industry source.

The MoU was queried regarding exported LNG volumes. Simson said: "It depends on national decisions. Of course, Israel is the one that has to decide - what are the volumes they are willing to export."

"We see that there is spare capacity in liquefaction facilities here in Egypt, but exact volumes were not part of our memorandum of understanding."