Photo Credit: Moshe Shai / Flash 90
'Tamar' gas processing rig 24 km off the Israeli southern coast of Ashkelon.

Egypt announced that starting next year it will it begin to exclusively rely on their recently discovered offshore liquid gas reserves and the two liquid gas facilities it built. In 2019, Egypt will begin exporting their gas to other countries, according to a report in Yisrael Hayom. Egypt is also considering building a third liquid gas processing facility.

The offshore gas reserves that Egypt discovered are larger than Israel’s offshore Leviathan and Tamar reserves combined.


This competition is a blow to Israel’s natural gas investors who were hoping to export Israel’s natural gas overseas, and to Egypt in particular.

Egypt opened up their gas market to competition this past summer, allowing private companies to use Egypt’s existing infrastructure, while providing them with flexible pricing solutions. It took Egypt only two years to get the legislation passed to allow that. Egypt’s president Al-Sisi signed the legislation in August.

In response to the Egyptian’s announcement, Israel’s Minister of Energy Yuval Steinitz announced that Israel’s power plants will generate all their electricity needs exclusively through natural gas by the year 2022. Presumably that statement wasn’t referring to green energy sources, such as solar fields. Israel will also issue a tender to allow five more companies to join the exploration for offshore natural and liquid gas, including four Indian companies.

The development of Israel’s natural gas export industry has been held back by leftwing groups strongly opposed to the financial terms the foreign investors and exploration companies received. They received those favorable terms back when no one knew there was any natural gas in Israel at all, and the explorations were pure speculation. The Sheshinsky Commission was set up to review and improve the terms and taxation of Israel’s natural gas exploitation in Israel’s favor, while not overly harming or discouraging investors, current or future.

Others in Israel believe that Israel shouldn’t export any natural gas reserves at all, and only use them internally, which would make Israel energy independent for a very, very long time.

The investors, both local and foreign, want to begin making a profit on their investments and speculation.

On the political side of things, being an energy exporter provides prestige and leverage in the world of international politics. Something Israel can always use.


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