BICOM

What happened: On Wednesday Israel’s Energy Minister Karin Elharar signed a memorandum of understanding (MOU) between Israel, Egypt and the EU to cooperate on the sale, transportation and export of natural gas to EU countries.

• Minister Elharrar said: “This is a tremendous moment in which little Israel becomes a significant player.”
• Energy Ministry Director General Lior Shilat explained, “A pipeline exists between Israel and Egypt, and in the framework of the previous agreement to increase the supply to Egypt, (the pipeline) is being enlarged … the most efficient process is to funnel the gas to Egypt, which has two liquefying facilities. From Egypt, it will be shipped by boat to Europe.”
• The deal will also allow EU countries the rights to in turn sell off any excess gas.

Alternative to Russia: Ursula von der Leyen, president of the European Commission, visited Jerusalem and Cairo this week. She wrote on twitter that the MOU “will contribute to our energy security. And we are building infrastructure fit for renewables — the energy of the future”.

• Earlier with Prime Minister Naftali Bennett she explained, “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. It is an outstanding step bringing our energy cooperation to the next level.”
• Israel produces between 10-15 billion cubic meters of natural gas a year. However, after taking domestic use into consideration, only a fraction of the natural gas is exported to Egypt, and smaller number will eventually find its way to the EU at the initial stage.
• Israel aspires to double its capacity, which in turn will allow for an increase in export to Egypt and the EU.
• This figure would still be dwarfed by the scale of Russian supply to the eu. For comparison, last year the EU imported 150 billion cubic meters of natural gas from Russia, representing around 40  per cent of overall EU usage.

Israel-Lebanon maritime border: Two weeks ago, the UK based energy company Energean docked a floating rig in Israel’s Karish offshore gas field, 80 km from Israel’s northern coast.

• The gas field is in water internationally recognised as part of Israel’s economic zone. Nevertheless, its presence sparked threats from Lebanese leaders, including Hezbollah leader Hasan Nasrallah who claimed that the field belongs to Lebanon and threatened to target Israeli gas drilling rigs in the Eastern Mediterranean.
• Lebanese Prime Minister Mikati warned: “The positioning of the rig represents an invasion into the economic waters by the enemy Israel. This is a grave and dangerous step that might ignite tension for which the repercussions cannot be predicted.”
• This more extreme Lebanese position extends their claims south and contradicts their previous negotiating position on where its southern maritime border lies.
• In an unusual development, last week Israel’s Foreign, Defence and Energy Ministers issued a joint statement saying, “With its anchoring, the rig is located in Israeli territory, several km south of the area over which negotiations are being conducted between the State of Israel and the State of Lebanon, mediated by the United States. The rig will not pump gas from the disputed territory.”
• This week the US deployed State Department energy envoy Amos Hochstein to Beirut. He met with the Lebanese leaders, who thereafter conceded their maximalist claims.
• Hochstein said afterwards, “I heard a clear understanding that the economic crisis in Lebanon that is closely tied with the energy crisis needs to be solved and resolving the maritime dispute is a critical step to resolving the economic crisis.”
• Energy Minister Elharrar connected the pumping gas from Karish to the ability to increase Israeli gas exports to Egypt and Jordan and the EU.

Looking ahead: The MOU will be automatically renewed after three years, with the intention to extend the agreement for at least ten years.

• Like previous US administrations, the Biden team is keen to renew Israel-Lebanese maritime mediation after the sides broke off indirect talks two years ago. In a statement this week the US State Department: “Welcomes the consultative and open spirit of the parties to reach a final decision, which has the potential to yield greater stability, security, and prosperity for both Lebanon and Israel, as well as for the region.”