The surprising country that will also be affected by a war between Israel and Hezbollah

The winds of war on the northern border are increasing, and the fears of damage to Israel’s strategic infrastructure are strong. Prominent among them are the gas rigs, which are expected to be major targets of Hezbollah’s rockets, missiles and UAVs. Unlike other critical infrastructures, the shutdown of the rigs, if it occurs, will not only harm Israel – but Egypt as well.

Since 2020, the volume of Egypt’s gas imports from Israel has been increasing. Last year, for example, the country imported 8.6 BCM (billion cubic meters) of Israeli gas, while the domestic economy in Israel consumed 13.1 BCM – and the balance (2.9), goes to Jordan.

Egypt suffers from a severe shortage of electricity. The rate of gas production in the country reached a six-year low in 2023, with one of the reasons for this being the poor activity of its natural gas field. “The proven reserves of the ‘Zohar’ natural gas field, which is in Egypt’s economic waters, have decreased from approximately 1,000 BCM to approximately 350 BCM today – and half of them have already been produced,” explains Dr. Amit Mor, CEO of Eco Energy for strategic economic consulting , and a senior lecturer at Reichman University.

How did such a thing happen? According to Moore, “the project experts discovered that the gas is saturated with sulfur and corrosive, something that damages the production infrastructure and makes it difficult, and that a lot of water quickly penetrates the rock layer, which reduces the amount of gas that can be produced. In the last drillings, only water was produced.”

In fact, says Moore, “about 15% of the gas for local consumption in Egypt comes from Israel, and an all-out war between Israel and Hezbollah will very likely result in a complete cessation of gas production from the three Israeli fields, in accordance with the decision of the security establishment. Such a decision will be made to protect the production rigs and their workers from being hit by Hezbollah missiles.”

Cut out a coupon

Another reason for the gas shortage in Egypt is related to liquefied natural gas (LNG), which is a critical source of income for Cairo. The Tahrir Institute for Middle East Studies revealed that only 10% of the gas that Egypt imports from Israel is directed to local consumption, while 90% is directed to export to Europe – this despite the severe shortage of gas in the country. About 7.74 BCM of Israeli origin are routinely transported to Egypt’s liquefaction facilities, which makes it possible to export it anywhere in the world, and cut a coupon thanks to the price differences compared to liquefied gas. Thus, in 2022, Egypt brought in 8.4 billion dollars from its exports.

“Egypt is a military dictatorship where the security establishment led by General al-Sisi owns about half of the Egyptian economy, including many industrial plants,” explains Dr. Moore.

At the beginning of the Iron Swords War, an example was given of the effect of a reduction in the supply of Israeli gas to Egypt, when gas production at the Tamar rig was then stopped. The outage lasted about a month and required igniting gas from the Leviathan reservoir to the local market. As a result, Cairo had to double the initiated power outages to two hours, and imported their first LNG tanker in about four years.

“If a war breaks out with Hezbollah and it is decided to stop the flow of gas from the rigs, it will not only affect the Israeli electricity economy, but also the Egyptian economy and especially the Egyptian economy,” Oren Hellman, former vice president of service, marketing and regulation of the electric company, tells Globes. And currently the CEO of the Israel-Gulf Chamber of Commerce and Innovation. “Stopping the flow of gas from Israel will force Egypt to stop exports, and this will harm the state’s revenues.”

Birth in telephone lighting

Egyptian citizens have been dealing with the consequences of the lack of electricity in their country for some time. Last week it was reported that the residents of Cairo suffered a three-hour power outage a day, and at the Tahrir Institute they said that last year doctors had to give birth in the hospitals using mobile phone lighting. This is a chronic problem that is getting worse. The Egyptian government was forced in July of last year, when the gas flow from Israel was still stable, to create a daily electricity allowance plan – due to the high demand.

As part of that program, public sector employees, for example, were sent to work from home on Sundays in order to save on electricity. At the same time, the chronic power outages lasted about two hours in the cities and three hours in the villages every day. “The measure is intended to reduce the load on the electricity infrastructure in the country,” explained the Egyptian Prime Minister, Mustafa Madbouly. However, according to the human rights organization Human Rights Watch, the power outages were due to a lack of gas supply and not a load on the infrastructure, contrary to what he said.

Last December, during the election campaign in the country, an interesting event took place. That week, the power outages were “miraculously” stopped. Immediately after that, they returned, and a month later the rate increased by 7%-20%.

What will happen to Egypt if the gas export from Israel is stopped due to the escalation in the north? According to Dr. Moore, “Egypt will be forced to manage gas and energy economies with a significant shortage. And who will be hurt more – the petrochemical and textile factories owned by the Egyptian army or the electricity supply to the residents? It is most likely that the residents of Cairo sat in the scorching heat in the dark, and cursed Netanyahu, Nasrallah and al-Sisi.”