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News, June 2022
Israel Is Replacing Russia in Providing Europe with the Badly Needed Gas Supplies
June 15, 2022
Israel and Egypt sign gas export deal as Europe seeks Russia alternative
By Shira Rubin
Washington Post, June 15, 2022 at 10:58 a.m.
TEL AVIV —
Israel, Egypt and the European Union on Wednesday signed a trilateral natural gas agreement in Cairo, as Europe scrambles to cobble together an energy strategy to replace the Russian supplies it has relied on for decades.
The deal, which has been in the works since March, will enable Israel to streamline and increase the export of its natural gas through already existing pipelines to Egyptian ports, where it can be pressurized and liquefied, then transported to Europe.
“This will contribute to our energy security. And we are building infrastructure fit for renewables — the energy of the future,” Ursula von der Leyen, president of the European Commission, tweeted Wednesday from Cairo with a photo of the signing.
Israel in recent weeks had promised to accelerate its gas output as demand grew and prices soared. It is looking, in collaboration with other Middle Eastern countries, to sell to Europe, previously the largest client of Russian energy.
“With the beginning of this war and the attempt of Russia to blackmail us through energy, by deliberately cutting off the energy supplies, we decided to cut off and to get rid of the dependency on Russian fossil fuels, and to move away from Russia and diversify to trustworthy suppliers,” von der Leyen said at a joint news conference with Israeli Prime Minister Naftali Bennett in Jerusalem on Tuesday night, at the end of a two-day visit to Israel and the West Bank. “It is an outstanding step bringing our energy cooperation to the next level.”
Italian Prime Minister Mario Draghi also met with Bennett on Tuesday to discuss energy cooperation. Claudio Descalzi, the head of the Italian oil giant Eni, said last month that Italy aims to be fully independent from Russian gas by the winter of 2024-2025. On Wednesday, Eni said the state-owned Russian company Gazprom had cut its gas supply to Italy by 15 percent. Since Russia invaded Ukraine in February, Italy has signed deals with several energy-exporting African countries, including Egypt.
For Israel, the sudden energy shortfall in Europe is an opportunity to get involved in a global market that has become exponentially lucrative in recent months.
“This is a tremendous moment in which little Israel becomes a significant player,” Israeli Energy Minister Karin Elharrar said Wednesday in a statement.
Experts say Israel’s supply, extracted from three offshore Mediterranean gas fields, will be nowhere near Russian capacity. Israel produces roughly 12 billion cubic meters of natural gas a year, though industry analysts say at least double that amount exists in unexploited reserves. In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia, accounting for about 45 percent of E.U. gas imports.
But Alex Coman, an energy expert at Tel Aviv University, said Israel’s contribution is becoming increasingly important as the Ukraine war thrusts Europe toward a more “fragmented strategy,” in which it will buy smaller amounts of energy from a number of different countries.
“Beyond just the war in Ukraine, Europe is so traumatized from Russian brutality” that it has moved toward a general restructuring of its energy system, “to avoid having dependence on one energy source,” he said.
In May, the London-based Energean exploration and production company announced that it had made a new commercial gas discovery of about 8 billion cubic meters off the coast of Israel. The development project is slated to come online in September.
Energean’s CEO, Mathios Rigas, said that more pipelines were still needed to fully exploit the Eastern Mediterranean’s offshore supplies and that although “Europe needs gas today, there are no magic solutions.”
Beyond infrastructure, he said, the industry is challenged by both “below-surface — the rocks, the geology — and above-surface issues, disputes,” in a region that has for decades been marred by conflict.
Those issues surfaced this month when Lebanon protested the arrival of one of Energean’s floating rigs and claimed that the gas fields in question lie within its territorial waters. Israel has said the area is well within its exclusive economic zone. Lebanon is expected to drop the claim after a meeting in Beirut held this week with the U.S. senior adviser for energy security, Amos Hochstein, according to officials who spoke with the Reuters news agency.
Tugboats move an Energean floating production, storage and offloading ship along Egypt's Suez Canal on June 3. (Suez Canal Authority/AFP/Getty Images)
Wednesday’s export deal comes a day after the Russian state-owned company Gazprom said it would cut capacity on the Nord Stream pipeline — the largest gas supply link to the E.U. — by 40 percent following repair delays, boosting already elevated natural gas prices by 15 percent.
The E.U. has worked with the United States and other allies to impose sanctions on Moscow, but several member countries remain heavily reliant on Russian oil and gas.
Shira Rubin is a reporter for The Washington Post based in Tel Aviv. She covers news from Israel, the Palestinian territories and the region, with a focus on politics, culture, science and women's health. Twitter
Gazprom to cut Nord Stream gas deliveries by third
By Al Mayadeen English Source: Agencies
June 15, 2022
Gazprom said on Wednesday that it had stopped the operation of another Siemens gas turbine at the Portovaya compressor station, adding that it will be able to deliver no more than 67 million cubic meters of gas per day via the Nord Stream pipeline starting from Thursday. Deliveries of gas through Nord Stream will be cut by almost a third following Gazprom's decision.
"The daily output of the Portovaya compressor station from 01:30 Moscow time on June 16 [22:30 June 15 GMT] will be up to 67 million cubic meters per day." Gazprom wrote in its Telegram channel, adding that it "shuts down another Siemens gas turbine engine." Following Gazprom’s announcement, the European gas futures prices increased by 10% to over $1150 per 1,000 cubic meters.
Furthermore, according to new research, Russia earned $98 billion from fossil fuel exports during the first 100 days of its war in Ukraine, with the European Union being the top importer.
The report, released on Monday by the independent Centre for Research on Energy and Clean Air (CREA) in Finland, came as Russian forces continued to make slow but steady progress in their campaign to fully capture eastern Ukraine's Donbass region.
The US and the EU have sent weapons and cash to assist Ukraine in repelling the Russian advance, as well as punishing Moscow with unprecedented economic sanctions.
However, Kiev has called on Western countries to suspend all trade with Moscow in order to cut off its financial lifeline in the aftermath of the February 24 special operation. Prior to the war, Russia supplied 40% of the EU's gas and 27% of its imported oil.
Earlier this month, the European Union agreed to put an end to all Russian oil imports, keeping in mind that Europe is heavily dependent on Russian energy.
According to the report, the EU took 61% of total Russian fossil fuel exports, which amounts to $60 billion. The top importers were China, at 12.6 billion euros, Germany, at 12.1 billion euros, and Italy at 7.8 billion euros.
The revenues come mostly from crude oil sales, which amount to 46 billion euros. Next are pipeline gas, oil products, and liquefied natural gas and coal.
EU, Israel and Egypt sign deal to boost East Med gas exports to Europe
The production platform of Leviathan natural gas field is seen in the Mediterranean Sea, off the coast of Haifa, northern Israel June 9, 2021. REUTERS/Amir Cohen
Agreement aims to expand LNG shipments via Egypt Officials say significant increase could take couple of years EU and Egypt also working on green hydrogen partnership
CAIRO/JERUSALEM, June 15, 2022 (Reuters) -
Israel and Egypt will aim to boost natural gas exports to Europe under a memorandum of understanding (MoU) signed on Wednesday as the continent looks to replace Russian energy imports.
The framework deal signed with the European Union (EU) will be the first to allow "significant" exports of Israeli gas to Europe, Israel's energy ministry said.
Under the agreement, the EU will encourage European companies to participate in Israeli and Egyptian exploration tenders, the ministry said.
Some Israeli gas is already sent by pipeline to liquefaction plants on Egypt's Mediterranean coast, from where it is re-exported as liquefied natural gas (LNG).
Officials say they expect shipments of LNG from Egypt to Europe to increase under the agreement, though they have said it would likely take a couple of years before the exports can be significantly expanded.
Egypt is also a gas producer, but its exports have been limited by rising domestic demand.
"Today Egypt and Israel make a commitment to share our natural gas with Europe and to help with the energy crisis," Israeli Energy Minister Karine Elharrar said after the signing of the MoU in Cairo.
Egypt exported 8.9 billion cubic metres (bcm) of LNG last year and 4.7 bcm in the first five months of 2022, according to Refinitiv Eikon data, though the majority goes to Asia.
Israel is on track in the next few years to double gas output to about 40 bcm a year as it expands projects and brings new fields online, industry officials say.
The EU imported 155 bcm of gas from Russia last year, accounting for about 40% of the bloc's overall consumption.
The agreement signed on Wednesday recognises that natural gas will have a central role in the EU's energy market until 2030.
Following that, the use of natural gas is expected to decline in line with its commitment becoming a zero-emission economy by 2050.
The deal was signed as Egypt hosted the East Mediterranean Gas Forum, a grouping established in 2020 that aims to boost gas trade between regional states including Israel, Greece, Cyprus and Jordan, and during a visit to Cairo by European Commission President Ursula von der Leyen.
"This is a big step forward in the energy supply to Europe," von der Leyen said after meeting Egyptian President Abdel Fattah al-Sisi, adding that the EU wanted to work with Egypt long-term to expand renewable energy supplies.
Part of that is an ambitious partnership for hydrogen production, expected to be launched when Egypt hosts the COP27 climate conference in November, she said.
"I see it as a first step leading to a Mediterranean-wide agreement because I see that the energy supplies were mostly traditionally in the northern part, now are shifting towards the global south and east," von der Leyen said.
Egypt recently signed a flurry of preliminary agreements for green hydrogen and ammonia projects on its Red Sea coast.
Medvedev doubts Ukraine will still exist in two years
The Deputy Head of Russia’s Security Council also noted that the US has invested so much in the ‘anti-Russia’ project that everything else means nothing to it
MOSCOW, June 15, 2022. /TASS/.
Deputy Head of Russia’s Security Council Dmitry Medvedev took to Telegram on Wednesday and conveyed his doubts about Ukraine still being around in two years.
He referred to a post saying that Ukraine "seeks to get LNG from its overseas sponsors under lend-lease and pay for it in two years," because otherwise "it will just freeze" next winter. "The only question is, who says that Ukraine will still exist in two years?" Medvedev maintained.
However, in his words, "the Americans don’t care anymore." "They have invested so much in the ‘anti-Russia’ project that everything else means nothing to them," Medvedev emphasized.
China in Talks With Russia to Buy Oil for Strategic Reserves
Beijing in discussions with Moscow to buy more Russian oil Cheap Russian oil is opportunity for China to add to reserves
China in Talks With Russia to Buy Oil for Strategic Reserves WATCH: China is seeking to replenish its strategic crude stockpiles with cheap Russian oil. Anna Kitanaka reports.Source: Bloomberg
May 19, 2022,
China is seeking to replenish its strategic crude stockpiles with cheap Russian oil, a sign Beijing is strengthening its energy ties with Moscow just as Europe works toward banning imports due to the war in Ukraine.
Beijing is in discussions with Moscow to buy additional supplies, according to people with knowledge of the plan who asked not to be named as the matter is private. Crude would be used to fill China’s strategic petroleum reserves, and talks are being conducted at a government level with little direct involvement from oil companies, said one person.
Oil has rallied this year following Russia’s invasion of its smaller neighbor, but the price of its own crude has tumbled as buyers step away to avoid damaging their reputation or being swept up in financial sanctions. That’s provided an opportunity for China to cheaply replenish its vast strategic reserves, which are typically tapped during times of emergencies or sudden disruptions.
“China and Russia always engage in normal economic cooperation and trade on the basis of mutual respect, equity and mutual benefit,” Chinese Foreign Ministry spokesman Wang Wenbin said at a regular press briefing on Friday. “I want to stress that unilateral sanctions are not conducive to resolving issues, but constitute defiance of the existing economic system and rules.”
In order to deal with skyrocketing oil and gas prices, China has organized various ways to import the fuels, the National Development and Reform Commission said in statement on Thursday. The foreign ministry for Russia didn’t immediately respond to a request for comment.
Details on volumes or terms of a potential deal haven’t been decided yet, and there’s no guarantee an agreement will be concluded, said one person.
The US and UK have pledged to ban Russian oil imports and the European Union is discussing similar steps, but crude from the OPEC+ producer is still flowing to willing buyers including India and China. For the Asian nations, the heavily discounted oil is an opportunity too good to pass up, part of the reason why China has continued to take cargoes originating from Iran and Venezuela.
Refiners in China have been quietly buying Russian crude since the invasion, even as a Covid-19 resurgence dents consumption in the world’s biggest crude importer. Apparent oil demand last month slumped 6.7% year-on-year as strict lockdowns confined millions to their homes. The outbreak has capped further gains in oil prices, although Brent is still up more than 40% this year.
China doesn’t publicly disclose the size of its crude inventories, but a number of companies use tools such as satellites to estimate supplies. Some forecast the nation has the capacity to store more than 1 billion barrels of combined commercial and strategic stockpiles. Third-party estimates also indicate supplies have swelled recently due to the Covid-19 outbreak.
“There is still room to replenish stocks and it would be a good opportunity for them to do so, if they can be sourced on commercially attractive terms,” said Jane Xie, a senior oil analyst at data and analytics firm Kpler.
Kpler estimates overall stockpiles are at 926.1 million barrels, up from 869 million barrels in mid-March -- but still 6% lower than a record in September 2020. By comparison, the US Strategic Petroleum Reserve has a capacity of 714 million barrels. It currently holds about 538 million barrels.
China sold crude from its strategic reserves last year in a historic move to try and tame oil prices, which had soared as major economies rebounded from the pandemic. The action had little lasting impact, only depleting stockpiles and raising the prospect that China would need to restock at higher prices.
Not long after the sales, the US named China along with other major Asian oil consumers including India and Japan as participants in a coordinated release of strategic reserves. It’s unclear whether China tapped its emergency stockpiles as part of this US-led initiative.
China in Talks to Buy Russian Oil for Strategic Reserves - Bloomberg
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