Egypt is suffering longer daily blackouts as domestic natural gas production declines and imports from Israel dry up, local media have reported.
A government spokesman said in a Facebook post this weekend that the blackouts, which began in July this year due to a shortage of gas, will be extended because of higher consumption and "a decrease in the quantities of gas supplied from outside Egypt, from 800 million cubic feet of gas per day to zero," as quoted by Mada Masr.
Egypt imports gas from Israel, which the latter produces from its offshore field. Following the Hamas attack on southern Israel earlier this month and the reignition of bilateral hostilities, Israel ordered Chevron to shut down the Tamar field, reducing the amount of gas available for export.
The gas that comes to Egypt from Israel is mostly used locally with the rest liquefied at Egypt's LNG plant and exported.
This is a big reason why the latest war in the Middle East had Europeans on edge with regard to gas, as prices surged immediately on the news about the Tamar shutdown. Israel is not a big supplier to Europe but it is a potentially important supplier with a view to supply diversification.
Gas supply from Israel's other large offshore field, Leviathan, are also not going to Egypt where they used to go. Instead, Chevron has rerouted the flow to the Arab Gas Pipeline that passes through Jordan. Also, an Israeli government source said that domestic supplies of gas were being prioritized over export volumes.
Meanwhile, Egyptian media are reporting that consumption of natural gas has increased substantially, citing officials from the country's government. One outlet, Ahram, wrote that, per the government, on Saturday Egypt's gas demand had hit 700 million cu ft daily-an 18% increase on a year ago.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More