LONDON – Lower regional demand for Eastern Mediterranean gas this year could continue, according to GlobalData.
The impact of COVID-19 has been a major factor, and weakened demand could lead to reduced gas output from the region until 2023, the consultant claimed.
Oil and gas analyst Daniel Rogers said: “Major gas fields including Zohr and Tamar [offshore Egypt and Israel] have constrained production in light of diminished domestic demand and an unfavorable LNG market.”
Weak demand and spot prices restricted LNG exports out of Egypt during April, May, and June, and reduced regional demand has also constrained Israel’s gas output and led to downward revisions of the country’s forecast gas sales volumes.
Rogers said: “With Zohr and Leviathan potentially ramping up to capacity and additional volumes coming from Karish, we could see the region’s gas surplus exceeding export capacity for a number of years.
“This would mean continued production constraints, likely on the major producing fields, though this could be mitigated if partners can agree to re-start the Damietta LNG plant.
“In the short term, the key gas producers in the region – the likes of BP, Eni, Shell, and Delek are facing weakened LNG spot prices and gas production curtailments. While over the longer term, the lack of active LNG export capacity and muted domestic consumption could prove problematic for recent entrant Chevron and Israeli-focused Energean.”