An intensification in the conflict between Israel and Hezbollah is likely to force Israel to shut down some or all of its major gasfields, further straining energy-starved Egypt, analysts report.
This week, cross-border airstrikes, rocket, and drone attacks between Israel and Hezbollah continued, with both sides warning of a potential larger conflict. Iran, Hezbollah’s main ally, has indicated that if Israel attacks Lebanon, a coalition including Syria, Yemen’s Houthi rebels, and Iraqi militias would join an “obliterating war” against Israel.
Despite threats from Hezbollah leader Hassan Nasrallah to target Israel’s energy infrastructure, Israel approved a plan on June 26 to more than double the gas allocated for exports, benefiting Egypt, the largest consumer of Israeli gas.
Israel currently supplies gas to Egypt through two pipelines from the Leviathan and Tamar fields, which together produce about 21 billion cubic meters of gas annually, with nearly nine billion cubic meters exported to Egypt last year. Plans to expand Leviathan’s capacity with a $500 million investment were announced last week, although additional volumes will take several years to materialize, according to Simon Henderson of The Washington Institute for Near East Policy.
The possibility of an all-out war with Hezbollah could lead Israel to shut down its offshore operations, said Cyril Widdershoven, an analyst at Hilltower Resource Advisers. Last year, Israel temporarily shut down the Chevron-operated Tamar gasfield after an attack by Hamas, resuming production a month later with 60% of domestic demand met by the Karish offshore gasfield, which could also be targeted by Hezbollah.
“If there is an organization that can really jeopardize Israel, it is Hezbollah, not only because of the sheer number of weapons but also because of the proximity,” said Danny Citrinowicz, a former Israeli military intelligence officer. Hezbollah’s extensive missile and drone capabilities pose a significant threat to Israel’s energy infrastructure.
In July 2022, Hezbollah launched drones targeting Karish following disputes over maritime borders, which were later resolved in October, allowing gas exploration and development to proceed. Despite ongoing conflict, Lebanon’s caretaker Minister of Energy and Water confirmed the maritime border deal with Israel remains in place.
A representative for Energean, the operator of Karish, expressed confidence in the Israeli military’s ability to protect strategic assets. However, longer power cuts in Israel could have severe implications, as highlighted by Shaul Goldstein, CEO of Israeli utility Noga, who stated that Israel is unprepared for extended electricity outages.
Egypt, already facing a severe energy crisis and rolling power cuts, is particularly vulnerable to disruptions in Israeli gas supplies. Last year’s suspension of Tamar gasfield led to a 20% drop in Israel’s gas shipments to Egypt, and a recent 10-day cut reduced deliveries by half.
For Egypt, any further reduction in Israeli gas exports would come at a critical time, with domestic production lagging behind demand, especially as summer begins. Egypt reached natural gas self-sufficiency in 2018 but has faced shortfalls since 2022 due to the depletion of the Zohr field, which accounts for 35% of the country’s total gas production.
“In case of further cuts, Egypt would need to source alternative and costly gas supplies from the spot LNG market and, at the same time, revert to longer electricity cuts during the day,” said Francesco Sassi of Ricerche Industriali Energetiche.
To address the energy crisis, Prime Minister Mostafa Madbouly announced a $1.18 billion allocation for importing natural gas and mazut. This week, Egypt received a shipment of 3.5 million cubic feet of US LNG, expected to be converted to natural gas within the week.
Longer power cuts pose significant risks for Egypt due to their political, social, and economic implications, Sassi noted.
