How does Israel maintain gas flow amid the war? Upending global energy security

In the aftermath of Hamas’s unprecedented assault on Israel, the ensuing war is threatening to rattle a key natural gas supply hub in the Eastern Mediterranean region. Just two days after Hamas launched the surprise attack — Israel's Energy and Infrastructure Ministry announced a temporary halt in the supply of gas from the country’s Tamar reservoir. The suspended platform is run by the US Chevron company and is located some 25 kilometres off the city of Ashdod along Israel's southern Mediterranean coast.

Tamar produced 10.25 billion cubic metres (bcm) of gas in 2022, 85% of which was used in the domestic market, while the remaining 15% was exported to Egypt and Jordan. Chevron owns a 25% stake in Tamar, while Isramco holds 28.75%, the UAE's Mubadala Energy 11%, Union Energy 11%, Tamar Petroleum (TMRP.TA) 16.75%, Dor Gas 4% and Everest 3.5%. Considering the potential risks of Hamas's rocket attacks and unrest, the Israeli Energy Ministry urged the running company to shut down the facility to avoid potential environmental catastrophe.

Indeed, the decision to halt the production generated debates regarding the negative impacts on Israeli domestic energy security as the Tamar field usually meets around 70% of Israel’s energy needs for power generation. In this regard, Israel started to supply energy needs alternative fuels to power its stations. Namely, Israel is managing to backfill from some of the other fields. But in addition to keeping the lights on at home, gas from Tamar — and from Israel’s larger Leviathan field — has been feeding a struggling Egyptian natural gas sector.

Israel's neighbouring states, like Egypt and Jordan, supply natural gas through Arab Gas Pipeline (AGP). Jordan imports almost all of the energy it needs, and if gas stopped flowing through AGP, it could have profound socio-economic implications and lead to instability in that country. Egypt imports Israeli gas from both the Tamar and Leviathan gas fields, located in the Mediterranean Sea off the coast of Israel, to help meet its domestic demand and for LNG exports from its two liquefaction plants. If the conflict in Gaza escalates, it could also deal a serious blow to sentiment among international investors at a time when Israel and Lebanon both want to encourage offshore oil and gas exploration.

Despite forecasts from experts regarding the upcoming negative trends in the global energy market, the end of the war in Gaza is not on the horizon. According to the official narrative of the Israeli government, the war will not end until Hamas is destroyed and disarmed. As of today, the Israel-Hamas war has not significantly affected the global energy market, except for the rise of crude oil prices. As Israeli bombardments intensify over a Gaza Strip now deprived of electricity, traders anticipate an extension of the Israeli-Palestinian conflict in the Middle East. The deadly offensive sent tremors through the oil markets, causing prices to climb to $94 a barrel. It also reignited fears among oil traders and economists that markets could breach the $100 a barrel mark. Moreover, heating oil prices are expected to climb, mostly due to seasonal changes. Demand will rise as temperatures begin to drop.

On the other hand, the situation may also affect gas-exporting countries like Qatar, which is a major player in the global gas market. If things worsen, gas prices around the world could keep climbing.

Although the Israeli Energy Ministry says that there is no major energy crisis emerged in the country after Tamar field production was halted, the International Energy Agency suggests that the decision would have impacts both on gas deliveries to the domestic market in Israel and on the country's export capability. For example, the longer halt in Tamar field will neglect Israel’s gas exports to Egypt, which was agreed in August 2022. As such, the sudden loss of a critical gas supply from Tamar could increase the existing strain on Egypt’s gas supplies and further jeopardize its export capabilities. For the past year, she explained, Egypt’s natural gas shortage has caused widespread blackouts.

In this vein, the potential energy crisis in the Mediterranean region caused by the Israel-Hamas war could encompass a broader area, including regional states like Egypt, Jordan, and the Western allies, and provoke the US intervention to prevent or smooth its impact.