The Israel-Hamas war has not significantly impacted Mideast oil and gas flows so far, but critical energy infrastructure such as the Arab Gas Pipeline (AGP) is being watched closely.
The pipeline connects Egypt with Jordan and gas shipments via AGP have been disrupted in the past by attacks in the Sinai Peninsula.
Jordan imports almost all of the energy it needs, and if gas stopped flowing through AGP, it could have serious socio-economic implications and lead to instability in that country.
If the conflict in Gaza escalates, it could also deal a serious blow to sentiment among international investors at a time when Israel and Lebanon both want to encourage offshore oil and gas exploration.
High casualty levels in Gaza and an expansion of the conflict into a regional war could drive “a severe degradation of the investment climate” in the Levant and the Gulf, according to Eurasia Group.
If war breaks out along Israel’s northern border with Lebanon and Iran becomes involved, there could be “massive hits to business and consumer confidence,” Eurasia added.
Energy Intelligence takes a look below at the countries that are connected to the Arab Gas Pipeline.
Egypt
Egypt, Africa’s third-largest natural gas producer, has come under pressure because of the Israel-Hamas war.
It relies on Israeli gas imports during the summer months to keep the lights on and air conditioners running.
AGP — with a reported capacity of 234 billion cubic feet per year (640 million cubic feet per day) — currently ships natural gas from Egypt to Jordan at annual rates of 26 Bcf and 44 Bcf.
Exports from Israel’s giant Leviathan field — operated by US major Chevron — flow through the AGP system.
As domestic demand has soared, Cairo is facing a supply crunch. It has tried to reduce its gas consumption by 20% this year and halted LNG exports from its two liquefaction plants over the summer.
Average gas production for the 2022/23 fiscal year to Jun. 30 was 6.2 Bcf/d, while average consumption hit 5.9 Bcf/d, Egyptian Natural Gas Holding Co. confirmed last month.
Egypt said this week that its imports of Israeli gas fell to zero from recent levels around 800 MMcf/d.
However, upstream operators contradicted that, telling Energy Intelligence that Israeli gas exports to Jordan had continued via Egypt.
Meanwhile, the East Mediterranean Gas pipeline running from Ashkelon in Israel to Arish in northern Egypt — close to the area of conflict in Gaza — has been closed down as a precaution.
Jordan
Jordan, which imports more than 90% of its energy needs, relies on gas that is delivered via Egypt and Israel.
In addition to gas supplied by AGP, Israel’s gas transmission system has an onshore connection with the Jordanian gas network near the Israeli town of Beit She’an.
Jordan is under pressure to sever ties with Tel Aviv, after Israel’s offensive in Gaza — in response to the deadly Oct. 7 Hamas attack on Israel — claimed more than 9,000 Palestinian lives so far.
Israel’s strikes in Gaza have fueled anger in Jordan, which has a large Palestinian population, many of whom are Jordanian citizens.
The kingdom relies heavily on international aid and grants to cover its budget and current account deficits, and disruption of gas flows could worsen already difficult economic conditions and stoke social unrest.
Israel
Israel is the second-largest natural gas producer in the Eastern Mediterranean after Egypt.
After the Hamas attack, Israel closed down the Chevron-operated Tamar offshore gas field as a precaution because of its proximity to Gaza. The field had previously been supplying gas to Israel and Egypt.
The country is reportedly exporting 70% less natural gas since it shut down Tamar at a cost of around $200 million a month, according to a report by consulting firm BDO.
Israel had recently advanced several pipeline capacity expansions to meet rapidly rising demand for gas in Egypt, which looks set to face a gas shortage by the middle of next year.
In August, the government approved an increase in pipeline gas exports to Egypt of about 350 MMcf/d for the next 11 years.
Israeli government sources say a plan to build a new onshore pipeline connecting Israel’s southern gas pipeline network to the AGP by 2026 could be impacted by the war.
The proposed Nitzana pipeline would have a capacity of 580 MMcf/d to 770 MMcf/d.
If the pipeline project is disrupted that would affect Chevron’s plans to increase gas output from the Tamar field from 1.1 Bcf/d to 1.6 Bcf/d, with first gas from the expansion due by early 2025.
Despite the conflict, Israel recently awarded European majors Eni and BP offshore oil and gas exploration blocks as part of its fourth upstream bid round.
Lebanon
Lebanon is currently facing the worst economic crisis since its independence. It has long been plagued by power shortages and continues to grapple with energy shortages.
Up to now, Lebanon’s crude oil and fuel needs have been met by supplies from Iraq as well as refineries in Turkey and Italy.
Lebanon does not currently receive gas from the Arab Gas Pipeline, although there has been talk of using it to deliver gas via Syria for power generation in Lebanon.
Unlike Egypt and Israel, Lebanon does not currently produce gas, but its government estimates that there could be 25 trillion cubic feet or more of untapped resources in the waters off its coast.
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