- Israel told Chevron to shut down a major natural gas field, threatening further fuel price rises.
- The world natural gas market has already been shaken by the war in Ukraine and strike threats in Australia.
- Some Israeli gas from Tamar is exported to Egypt, which processes the fuel into LNG which is exported to the European Union.
Be prepared for bad news before winter: Natural gas prices may rise as energy giant Chevron halted operations at a major Israeli gas field following orders from authorities.Thank you for reading this post, don't forget to subscribe!
“In view of the situation, the Israel Defense Establishment has ordered the temporary suspension of natural gas supplies from the Tamar field,” Israel’s Energy Ministry said on Monday. The Tamar offshore gas platform off Israel’s southern coast is within rocket attack range of the Israel-Hamas war.
The shutdown could be a catastrophic development in energy markets. Energy markets have already been shaken by the war in Ukraine and strike threats in Australia, another major gas producer.
Although Israel is not a top natural gas producer, the country’s production has increased after production began at several fields, including Tamar. Chevron holds a 25% stake in Tamar, while Houston-based Isramco holds a 28.75% stake.
Some Israeli gas from Tamar is exported to Egypt, a major player in the EU’s energy security. That’s because Egypt processes the fuel into liquefied natural gas – which is then exported to EU countries that are weaning themselves off Russian energy amid the war in Ukraine.
It was not immediately clear how much LNG EGYPT is shipping to Europe, but investors are already fearful of the Tamar closure, as shown by the surge in natural gas futures prices.
After news of Tamar’s closure broke, benchmark Dutch gas futures surged nearly 30% this week to 49.455 megawatt-hours on Tuesday, their highest level since August. Since natural gas is primarily used for power generation and heating, higher prices for the fuel can lead to higher electricity bills.
Chevron told Insider it will continue to supply Israel and its customers in the region from the Leviathan gas field, another major facility in the Mediterranean Sea.
However, Bloomberg reported on Tuesday, citing Egyptian officials, that the suspension of Tamar operations had already cut Israeli gas shipments to Egypt by 20%.
“If we remove Israeli piped gas imports from that equation, it will hurt Egypt’s ability to export LNG in the coming months,” International Energy Agency analyst Gergely Molnar said on Tuesday, according to S&P Global.
Dutch TTF natural gas futures closed 12.5% higher on Tuesday at 49.455 megawatt-hours. They are down 41% so far this year.