EU working on gas deal with Egypt, Israel to shore up supply

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The European Union is working on a deal to import Israeli gas through Egypt as the bloc rushes to reduce its reliance on Russian supplies.

The fuel would be turned into liquefied natural gas at Egypt’s processing plants before being shipped to the EU, according to documents seen by Bloomberg. An agreement would bolster European market opportunities for Israel, where domestic gas prices are much lower than rates it can charge on the continent.

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Vladimir Putin’s invasion of Ukraine sparked international condemnation and a move by buyers of Russian gas to secure alternative supplies. Since the EU imported about 40 percent of its gas from Russia last year, it will need to tap multiple sources of the fuel - as well as raising renewables output - to meet demand.

As part of a potential memorandum of understanding, the EU, Israel and Egypt would also increase collaboration on clean energy projects, the documents showed.

Any eventual deal would require the backing of EU member states. The European Commission didn’t immediately respond to a request for comment.

Romania is one EU country to have flagged an interest in importing LNG from Israel via Egypt, saying in April it would help strengthen energy security.

Israel’s gas currently mostly serves the local market as well as neighboring Egypt and Jordan.

Israeli exporters have been increasing shipments to Egypt this year, though it’s not clear how much is sent on from its Idku and Damietta liquefaction plants to Europe.

Back in February, Israeli Energy Minister Karine Elharrar said that she would study any request for gas supply from the EU, but that it’s unlikely the country would be able to send “huge quantities given that most of its present capacity is committed to Egypt, Jordan and the domestic market.”

A significant boost in supplies would require the development of new large gas deposits in the East Mediterranean area.

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