Israel’s $35bn gas deal to ease Egypt’s energy crunch and cut import costs

Israel’s $35 billion gas deal with Egypt is expected to ease the North African country’s energy crisis and cut its import costs, analysts say.

The Arab world’s most populous country is increasingly relying on gas imports from Israel and the US to meet its energy demand amid lower production from its maturing gasfields.

Once a regional gas exporter, Egypt has turned to costly liquefied natural gas (LNG) imports as output declines and power demand rises.

Egypt’s gas production is forecast to slide to 43 billion cubic metres this year, down from 49 bcm last year and significantly lower than its peak of 70 bcm, Rystad analysis shows.

“The new deal is extremely important for Egypt, particularly when they have recently switched from exporters to seasonal importers and then finally net importers,” Fiza Jan, a senior analyst from Rystad Energy, told The National.

“They are already importing a lot of LNG along with the pipeline gas from Israel and the new deal will further increase its imports.”

On Wednesday, Israel approved a deal that will supply natural gas to Egypt. Prime Minister Benjamin Netanyahu described it as the country's “largest” gas deal that would contribute to stability in the region.

The announcement came after Israel signed an export agreement in August to supply up to $35 billion of gas to Egypt from the Leviath