Egypt Pipeline Explosion Cuts Gas Supply to Israel

by Christopher Helman, Forbes (blog), Feb 5, 2011
An explosion today [Feb 5] on the Arab Gas Pipeline [AGP] forced Egypt to shut off natural gas supplies to Israel and Jordan. [...] [Egyptian] Oil Minister Sameh Fahmy reportedly said it could take up to two weeks to repair the damage.

The pipeline is the third most strategically important piece of energy infrastructure in Egypt after the Suez Canal and the Sumed Pipeline. But it [its El Arish-Ashkelon branch] is the most important one to Israel, delivering 40% of Israeli natural gas supplies. [Total gas consumption in Israel stood at around 5.2 bcm in 2010, of which 2.1 bcm were imported from Egypt -- D.R.]. The Israeli government said this afternoon that it did not expect any interruption of electricity supplies as the country has gas in storage and can also switch to other fuels like [fuel] oil and diesel. Israel started receiving gas from the [El Arish-Ashkelon submarine] pipeline in 2008. [...]

One thing is for sure. Faced with insecure gas supplies from Egypt, Israel must now move with haste to develop the massive reserves of natural gas recently discovered offshore. You can read about them here (Leviathan Oil Field Could Supply Israel For Decades) and here (Israel Confirms Leviathan Gas Find). [Please read also my post here]. Read more

(The branch of the pipeline that carries natural gas into Israel wasn’t directly damaged in the incident, as the Sinai incident occurred on a part of the natural-gas network before it divides into branches serving Jordan, Syria and Lebanon, via Jordan, and Israel, via El Arish-Ashkelon branch. The blast occurred at around 7 a.m. (0500 GMT) on Saturday at a gas terminal, three km from the El Arish airport, North Sinai governor Abdel Wahab Mabrouk told reporters. He said the fire was brought under control by mid-morning, after valves allowing the flow of gas from the terminal into pipelines were shut off. Actually a fire and explosion at a gas metering station forced Egypt's gas transport company/Egyptian Natural Gas Company---GASCO---to cut off supplies to the Arab Gas Pipeline/AGP linking Egypt to Jordan, Syria, etc., as well as the pipeline supplying Egyptian gas to Israel. Egypt is an important gas producer of 64 bcm/y, of which some 45 bcm/y is consumed domestically and some 19 bcm/y is exported, mostly as LNG, according to the International Energy Agency. Gas demand has been increasing very fast over the past decade at 8%/year. Due to this growth, gas exports have been limited to one third of the reserve base. Liquefaction capacity stands at 16 bcm and exports averaged 14 bcm over 2007-09. The LNG produced in Egypt is going to Spain (4.3), U.S. (4.5), UK (0.5), South Korea (1.9) and France (1.4). Some 5 bcm/y is exported by pipeline, mostly to Jordan, Israel and Syria. Both Jordan and Israel’s power sectors are dependent on gas. See also my remarks here. Furthermore, Israel's Yam Thetis field---a major supplier of gas to Israel---off coastal Ashkelon was prepared to help compensate for the loss of Egyptian gas. The halt in Egyptian supplies also triggered a request for faster development of a floating LNG import terminal project. The planned location for the LNG import facility/floating platform/offshore LNG buoy is just off Israel's central Mediterranean coast at Hadera. For Egypt's East Mediterranean Gas Supply Corp, i.e. EMG, the gas exporting company via the 100-kilometer (62-mile) El Arish-Ashkelon submarine pipeline, please read my blog posts under the category/label "Israel." UPDATE: For the resumption of Egyptian gas supply to Israel, please see my post here. -- D.R.)