Production field in Israel shut down: European gas price rises

As of: October 11, 2023 11:58 a.m

Israel suspended production at a gas field off its southern coast earlier this week. The European gas price reacts to the shutdown with a significant increase.

Supply concerns have pushed up the price of European natural gas for the third day in a row. During trading, the trend-setting futures contract TTF for delivery in one month reached over 49 euros per megawatt hour (MWh) on the Amsterdam stock exchange today. Just under a week ago it was around 36 euros, which corresponds to an increase of more than a third.

Behind the price jump are concerns about a shortage: US energy giant Chevron has stopped exporting natural gas via a large underwater pipeline between Israel and Egypt following instructions from the Israeli Energy Ministry and is now supplying gas via an alternative pipeline through Jordan, the company announced yesterday.

Exports via the East Mediterranean Gas Pipeline have therefore come to a standstill. The pipeline runs from the southern Israeli city of Ashkelon, about ten kilometers north of the Gaza Strip, to El-Arish in Egypt, where it is connected to an onshore pipeline.

Production stopped in the Tamar gas field

On Monday, Israel suspended production at the Tamar gas field, operated by Chevron, off its southern coast – three days after violence erupted following a surprise attack on Israel by the radical Islamic group Hamas in the Gaza Strip. According to Chevron, the Tamar gas field produces 7.1 to 9.5 million cubic meters of natural gas per day and covers almost 70 percent of Israel’s energy consumption for electricity.

Israel’s Energy Ministry confirmed in a statement to Reuters that Chevron has applied to export gas via an alternative pipeline. This connects another Israeli offshore platform, Leviathan, to both Jordan and Egypt and is known as the Arabian Gas Pipeline. Exports will now be rerouted through the FAJR pipeline, which connects Jordan to Egypt, according to a Chevron spokesman.

Drilling rig in the Israeli offshore gas field Leviathan.

Separately, according to energy industry sources, the amount of gas exported from Leviathan to Egypt has been slightly reduced as supply to the domestic market takes priority. But it remains close to the quota.

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