The export of natural gas from Israel to Egypt is looking increasingly likely as the Egyptian government struggles to find a solution to its gas shortage and talks intensify with gas developers in Israel.

On 19 October, the partners in Israel’s offshore Tamar gas field announced they had signed a memorandum of understanding (MoU) with Egypt’s Dolphinus Holdings, agreeing to sell as much as 2.5 billion cubic metres over three years.

The deal is the latest in a string of similar agreements and comes as Cairo struggles to find a solution to its worst energy crisis in decades.

MoUs have also been signed for the sale of Israeli gas to supply liquefied natural gas (LNG) facilities run by Spain’s Union Fenosa and the UK’s BG Group in Egypt.

Poor management in Egypt’s energy sector has reduced international oil companies’ (IOCs’) willingness to invest in the country’s energy assets over recent years, something that has led to falling oil and gas production while consumption has increased.

Between 2004 and 2013, crude production peaked in 2009, when output stood at 730,000 barrels a day (b/d).

That same year, consumption stood at 726,000 b/d. Since then, crude demand has risen significantly, hitting 757,000 b/d in 2013, while production has dropped to just 730,000 b/d.

The picture is similar with natural gas. Egypt’s production peaked in 2009 at 62.7 billion cubic metres, which was 20.2 billion cubic metres more than the country’s domestic consumption, which stood at 42.5 billion cubic metres.

By 2013, the gap between output and demand had shrunk considerably, with production dropping to just 56.1 billion cubic metres and consumption rising to 51.4 billion cubic metres.

Data from 2014 is expected to show that demand for natural gas outstripped supply for the first time in the country’s history.

To solve this energy shortage in the short term, natural gas imports are going to be essential, and imports from Israel are likely to prove far cheaper than expensive liquefied natural gas (LNG) imports.

The latest deal proposes using the existing East Mediterranean Gas (EMG) pipeline that was previously used to export gas to Israel, something analysts say could make it faster to implement than other plans for import.

“The EMG pipeline deal could happen quite quickly as the pipeline is already in place,” says Robin Mills, head of consulting at Dubai’s Manaar Energy. “Supply to the LNG plants using new pipelines would take about 2 years after the investment decision.”

“There will be some media and public hostility, but the new government has the upper hand on security currently, and the country badly needs gas, so I think the deal will get forced through.”

Using the EMG pipeline means gas transportation infrastructure will not have to be built from scratch, but the existing pipeline passes through Egypt’s restive Sinai Peninsula and is vulnerable to attacks, creating additional security complications.

Although analysts are increasingly expecting at least one of the three gas importation MoUs to see fruition, all three schemes will involve overcoming significant obstacles.