Israel is preparing to respond to Iranian missile attack, potentially impacting East Mediterranean and European gas markets if Israeli gas shutdown is prolonged. Brief closures contrast with last year’s month-long shutdown. Egypt may face second gas crunch, potentially needing additional FSRU to cope with long-term Israeli gas interruption due to delayed expansion projects.
A broader escalation appears imminent as Israel prepares to respond to a recent missile attack from Iran, which could significantly affect the East Mediterranean and European gas markets if there is a prolonged shutdown of Israeli gas supplies. Although there was a brief interruption earlier this month, Israel continues to export gas to Jordan and Egypt from the Leviathan and Tamar fields. This recent closure, while short-lived, stands in contrast to the month-long shutdown experienced last year, when the flow through the East Mediterranean Gas Pipeline resumed on November 14.
A potential extended closure of Israeli gas supplies could have repercussions for the wider European gas market. Egypt is currently competing with Europe for spot liquefied natural gas (LNG) cargoes amid a gas shortage. Should the gas transit agreement with Ukraine not be renewed, Europe may need to increase its LNG imports to ensure adequate supplies for the winter. According to investment bank Goldman Sachs, the potential disruption of the Leviathan and Tamar fields could impact the global market by approximately 9 billion cubic meters annually.
An extended closure of Israeli gas supplies could pose challenges for Egypt, which is already facing its second gas crisis in a decade. Last October, a reduction of 800 million cubic feet per day in Israeli gas for a month resulted in power outages. During this period, Israeli gas exports to Egypt increased from 4.9 billion cubic meters to 6.3 billion cubic meters, while sales to Jordan remained stable at 2.7 billion cubic meters. Although Egypt has floating storage and regasification units (FSRUs) for LNG imports at Ain Sukhna and Aqaba, it may require additional FSRUs to manage a long-term interruption in Israeli supply.
Delays in Israeli gas expansion projects have been attributed to the threat posed by Iranian missiles. NewMed has confirmed that the third pipeline project will be postponed until April 2025, which will affect cash flow projections. Despite the recent brief closure, production levels from the Leviathan, Tamar, and Karish fields continue to be normal. The Israeli navy is stationed near offshore platforms, including the Karish gas field vessel, which has a gas treatment capacity of 800 million cubic meters per year. No direct damage to offshore infrastructure has been reported, despite rumors circulated by Iranian Press TV regarding a gas rig being hit. The gas flaring observed prior to the shutdown may account for the offshore images.
