EU expects Egypt to maintain LNG export levels

The European Union expects a framework deal between the EU, Israel and Egypt to allow Egypt to maintain "relatively high volumes" of liquefied natural gas (LNG) deliveries to Europe, the bloc's energy commissioner said on Monday.

"Now we have to solve some of the bottleneck issues," Kadri Simson, EU commissioner for energy, told Reuters on the sidelines of an energy conference in Cairo.

"We do expect that, with the help of this MoU (memorandum of understanding), Egypt can keep the relatively high volumes of LNG that it delivered to Europe last year."

Egypt expects to produce about 7.5 million tonnes of LNG this year, in line with production in 2022, when it shipped 80% of its LNG to Europe, Petroleum Minister Tarek El Molla said at the conference.

Molla said LNG plants were operating at less than full capacity, and could be expanded.

"They are there prepared for the time when we make the decision to increase their capacity to double or triple," he said.

The MoU was signed last June with the aim of boosting exports of Israeli gas transported by pipeline to liquefaction plants on Egypt's Mediterranean coast, before being shipped north to Europe.

Egypt has been trying leverage its two liquefaction plants, production from its own gas fields and gas imports from Israel, to position itself as a regional energy hub.

However, gas available for export has been limited by rising domestic demand and infrastructure constraints. Since prices and European demand surged due to the war in Ukraine, Egypt has been trying to save gas for export to ease an acute dollar shortage.

Officials have said that any significant expansion in export capacity under the deal with the EU and Israel will take time.

According to an industry source, the plants would need modification, or the construction of new production chains, to allow for any major boost to exports.

Asked about LNG volumes that could be exported under the MoU, Simson said: "It depends on national decisions. Of course Israel is the one that has to decide -- what are the volumes they are willing to export."

"We see that there is spare capacity in liquefaction facilities here in Egypt, but exact volumes were not part of our memorandum of understanding."

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