Could Egypt pivot to Qatar for its gas needs, away from Israel?

As tensions mount over the war on Gaza, Egypt's recent moves to import gas from Qatar have raised speculation about whether the populous, energy-hungry Arab country could scrap gas imports from Israel.

During a visit to Qatar's capital, Doha, on 12 May, Egyptian Minister of Petroleum and Mineral Resources Kareem Badawi discussed signing long-term contracts to import Qatari gas. The talks, held with Qatari Minister of Energy Saad Sherida al-Kaabi, who is also the CEO of the state-owned QatarEnergy, also focused on accelerating the implementation of joint natural gas projects.

Qatar is one of the world's top producers of natural gas.

Beyond gas supply agreements, the officials talked about enhancing upstream collaboration, particularly in accelerating exploration in QatarEnergy's concession areas in Egypt, notably in the Mediterranean, including the Nefertari, Cairo, Masry, and North Marakia wells, where QatarEnergy partners with ExxonMobil.

The meeting between Egyptian and Qatari ministers come at a time of high political tensions between Egypt and Israel due to the current war in Gaza.

The violence is right next to Egypt's Sinai, a triangular territory of 60,000 square kilometres that overlooks the Gulf of Aqaba and the Suez Canal, the shortest maritime route between the Red Sea and the Mediterranean.

Israel's war is also leaving an unimaginable human and material toll behind, opening the way for the displacement of much of Gaza's population of over 2 million into Egypt's Sinai. For its part, Egypt rejects any scenario involving Palestinian displacement, including calls by US President Donald Trump to take in Palestinian refugees from Gaza.

In that vein, Egyptian authorities drew up a plan for the coastal enclave's reconstruction, while also working with Qatar to get Israel and Hamas to agree to a ceasefire and a prisoner release deal.

War of wills

A few days before the Egyptian minister travelled to Doha, Israel reportedly delayed the delivery of a new gas shipment to Egypt, making this delivery conditional on a price rise commensurate with the rise in the international market's gas prices.

"The Israeli demand for a price increase falls into the realm of gas export economics," Osama Kamal, Egypt's former minister of petroleum, told The New Arab.

"Egypt can reject the Israeli demand, but this could force Israel to stop sending its gas to Egypt's liquefaction plants and send it directly to the international market," he added.

In using gas exports as a form of pressure against Egypt, Israel seems to be hitting its neighbouring country where it hurts.

Egypt depends on gas for over 90 percent of its power generation. However, the country's production of approximately 5.7 billion cubic feet of gas per day falls short of its consumption of 7.5 billion cubic feet per day, especially during the peak summer season of July, August, and September, when consumption rises dramatically.

To bridge this gap between production and consumption, Egypt imports gas anywhere it can get it, including from Israel. In the past years, Egyptian authorities have failed to secure the required amounts of energy for the operation of the nation's electricity plants, leading to repeated electricity outages that threatened a political backlash.

Egyptian gas imports from Israel rose to 1.2 billion cubic feet per day in October last year, up from 850 million cubic feet in July.

Gas imports are a crucial facet of economic and trade relations between Egypt and Israel, two states that signed a peace treaty in 1979 after almost three decades of conflict. These relations thrived in the past few years, with gas constituting the bulk of Israeli exports to Egypt.

Meanwhile, the import of gas from Israel was part of a larger Egyptian plan to turn itself into an energy hub, a plan born out of the discovery of substantial gas reserves in the Eastern Mediterranean region.

Egypt formed and hosted the Eastern Mediterranean Gas Forum to bring regional gas producers and consumers together. It hopes to use its sprawling liquefaction plants to collect liquefied regional gas and then send it to the international market.

When an Egyptian company struck a deal to import gas from Israel in early 2018, Egyptian President Abdel Fattah al-Sisi said his country "scored a goal."

Regional shifts

Kamal, the former Egyptian petroleum minister, lamented Egypt's overdependence on gas for power generation and the lack of alternatives while noting that the Eastern Mediterranean Gas Forum would be even more effective when all regional states joined.

"When important states like Syria, Turkey and Lebanon join the forum, this will open the door for even wider cooperation," the former Egyptian minister remarked.

"There are also hopes that as a cooperation mechanism, this forum will create balanced relations between states whose relations suffer tensions now," he added.

But Egypt's reported plan to import gas from Qatar may deal a blow to this Eastern Mediterranean "cooperative atmosphere," even as things could take a different turn if the war in Gaza comes to an end.

Nevertheless, regional changes may strongly induce Egypt and Qatar to continue to move past the 2017 crisis in their relations.

During the visit to Doha, the Egyptian minister of petroleum discussed energy infrastructure integration, cooperation in gas exploration and increasing production rates in areas where QatarEnergy has concessions in Egypt.

The two sides also discussed enhancing Egyptian companies' presence in the Qatari energy market.

In the Qatari capital, political analysts view these discussions as a positive step toward bolstering energy cooperation with Cairo.

"The state of Qatar will always be interested in offering support to Egypt," Qatari commentator Jaber Al Harami told TNA.

"It demonstrated enthusiasm to help Egypt move ahead with development, fight inflation and get over its economic problems on numerous occasions in the past," he added.

For his part, QatarEnergy CEO Saad Sherida Al-Kaabi reaffirmed the company's interest in expanding its exploration and investment activities in Egypt. This includes a recent agreement with EGAS and Chevron, under which QatarEnergy acquired a share in Chevron's stake in the North Dabaa offshore concession.

The meeting also highlighted the possibility of Egyptian energy firms in Qatar's energy sector, particularly in design, construction, maintenance, and operations across oil, gas, and renewables.