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3rd Oct 2022

EU seeks emergency gas supply deal with Egypt and Israel

  • Egypt has increasingly become a regional gas hub, with two liquefied natural gas (LNG) facilities even before Russia's invasion of Ukraine (Photo: kees torn)
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The European Union is negotiating a gas supply agreement with Egypt and Israel, according to internal documents dated 7 June and seen by EUobserver.

A draft memorandum of understanding with the two countries, still subject to changes, is part of its efforts to reduce its dependence on Russian fossil fuels in the wake of Moscow's invasion of Ukraine.

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"Security of gas supply is a common major concern. Egypt and the EU will work together on the stable delivery of gas to the EU," reads another internal document mentioning the trilateral collaboration deal.

The proposed agreement highlights that natural gas will be shipped to the EU from Egypt, Israel or any other source in the East Mediterranean region, including EU member states in the region.

European Commission president Ursula von der Leyen is due to travel to Cairo next week, but it is currently unclear whether the memorandum will be signed during her visit.

Egypt has increasingly become a regional gas hub, with its two liquefied natural gas (LNG) facilities even before the Russian invasion of Ukraine. But Israel has also become a key regional gas supplier in recent years.

Under the draft deal, imports from Israel would involve gas being processed at Egypt's liquefaction plants before being shipped to Europe as LNG.

This is partly explained because there is no infrastructure connecting Israel to Europe while five billion cubic metres of Israeli gas are exported to Egypt every year.

Nevertheless, the trilateral agreement would allow Egypt to purchase some of the gas being transported to the EU and other countries through the Egyptian territory for its own consumption or export.

The agreement will explore the need to develop new fossil fuel-based energy infrastructure projects and ways to encourage European companies to invest in natural gas exploration and production in Israel and Egypt.

But the memorandum of understanding, which would run for nine years after its signature, will not create any legal or financial obligations for the EU, the draft says.

Climate policies and promises?

The deal also includes measures to reduce methane leaks and promote the production of hydrogen for industrial processes, transportation and energy storage in the coming years.

But campaigners have raised concerns over the negative impact that these new agreements can have on the environment — and what they mean for EU climate policies in the long run.

With the EU pledging to reduce its imports of Russian gas by two-thirds this year and phase out its energy trade with Moscow by 2027, the bloc wants to diversify its energy supplies and import 10 million tonnes of renewable hydrogen by the end of the decade.

Besides Egypt, other countries like Azerbaijan are seen as a potential alternative source for EU imports as Russia's stockpiles account for about 40 percent of all its gas imports.

The EU has agreed on a coal and oil embargo in its previous packages of sanctions against Russia, without directly hitting gas imports.

Yet, Russia has cut supplies to several member states for refusing to pay for gas in roubles — including Poland, Bulgaria, Finland and the Netherlands.

Overall, the EU has paid nearly €26bn to Russia for gas imports since the invasion of Ukraine in late February, according to the Centre for Research on Energy and Clean Air.

During Von der Leyen's visit to Cairo next week, the EU and Egypt are expected to agree to scale up efforts for the development of renewables and energy efficiency.

"The very favourable endowment with renewable energy sources offers Egypt the opportunity to become a regional hub for the production and export of renewable and low carbon energy," reads a draft joint statement.

Egypt, which is the country hosting the upcoming United Nations Climate Change Conference in Egypt (COP27) in November, has not yet joined the Global Methane Pledge which aims to rapidly reduce climate-killing methane emissions.

EU countries rush to expand gas import capacity

EU plans to quit Russian gas and replace it, in part, by importing overseas liquified natural gas has lead to a flurry of new gas projects — which threaten to lock in unnecessary gas use for decades.

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