Energy News Beat
In a dramatic escalation of regional tensions, Israel has ordered the immediate shutdown of its Leviathan gas field, the country’s largest energy asset, citing security threats amid ongoing conflict with Iran. This abrupt halt, announced by Israel’s Energy Ministry on June 13, 2025, has severed a critical natural gas supply line to Egypt, sending shockwaves through the Eastern Mediterranean energy market and raising alarms about potential disruptions to Egypt’s power grid and commerce. The move, coupled with the suspension of operations at other Israeli offshore platforms like Karish, underscores the fragility of the region’s energy infrastructure in times of geopolitical strife.
The Scale of the Disruption
The Leviathan gas field, located 130 kilometers off the coast of Haifa, is a cornerstone of the region’s energy landscape, boasting 22.9 trillion cubic feet of recoverable natural gas. In 2024, the field was exporting a record 981 million cubic feet per day (mmcf/d) to Egypt, an 18% increase from the previous year, accounting for approximately 6.3 billion cubic meters (bcm) annually. This gas is vital for Egypt, which relies on Israeli imports to supplement its declining domestic production and meet surging summer demand. The shutdown has effectively cut off this entire export volume, reducing Egypt’s gas imports to near zero overnight.
While Israel’s Tamar field remains operational and continues to supply some gas to Egypt and Jordan, its capacity is limited compared to Leviathan’s output. Industry sources estimate that Egypt’s current import levels have plummeted to as low as 250 mmcf/d, a fraction of the typical 800 mmcf/d it receives from Israel. This shortfall is compounded by the fact that Egypt’s own gas fields, such as Zohr, are in decline, leaving the country heavily dependent on external supplies to power its grid and fuel its liquefied natural gas (LNG) export ambitions.
Impact on Egypt’s Power Grid
Egypt’s power grid is now under severe strain as the loss of Leviathan’s gas exacerbates an already precarious energy situation. Natural gas accounts for over 60% of Egypt’s electricity generation, and the country has faced recurrent power outages in recent years due to supply shortages and peak summer demand. The shutdown of Leviathan is expected to force Egypt to lean heavily on more expensive and polluting liquid fuels, such as diesel and fuel oil, to keep power plants running. This shift could lead to widespread blackouts, particularly in urban centers like Cairo and Alexandria, where demand is highest.
Analysts warn that prolonged disruptions could destabilize the grid further, with potential outages lasting hours or even days. The Egyptian government has already signaled plans to secure emergency LNG cargoes to bridge the gap, but global LNG markets are tight, and prices have spiked 6.6% in Europe following the news, complicating Egypt’s procurement efforts. The cost of these imports could strain Egypt’s foreign currency reserves, already under pressure from a growing trade deficit.
Ripple Effects on Egyptian Commerce
The gas shortage threatens to ripple across Egypt’s economy, which is heavily reliant on energy-intensive industries such as manufacturing, fertilizers, and petrochemicals. These sectors, critical to Egypt’s export revenue, face production cuts or higher operating costs as they scramble for alternative fuel sources. Small and medium-sized businesses, already grappling with inflation and currency devaluation, may bear the brunt of power cuts, leading to reduced output and potential layoffs.
Egypt’s LNG export sector, a key source of hard currency, is also at risk. The country’s two LNG terminals at Idku and Damietta, which rely on Israeli gas to supplement domestic supply, have been idled or are operating at reduced capacity. In 2023, Egypt exported 3.38 million metric tons of LNG, down significantly from 7.1 million metric tons in 2022, and the Leviathan shutdown could further halve this figure. This reduction undermines Egypt’s ability to capitalize on high global LNG prices and could worsen its balance-of-payments crisis.
The tourism industry, a pillar of Egypt’s economy, may also suffer as power outages disrupt hotels, restaurants, and transportation networks. With summer temperatures soaring, the lack of reliable electricity for air conditioning and other services could deter visitors, further straining an economy projected to grow at just 3.5% in 2025.
Geopolitical and Market Implications
The Leviathan shutdown is a stark reminder of the geopolitical risks embedded in the Eastern Mediterranean’s energy supply chain. Just months ago, optimism surrounded plans to expand Leviathan’s capacity from 12 bcm to 21 bcm per year, with ambitions to supply Europe via Egypt’s LNG terminals. Now, those plans are on hold, and Chevron, the field’s operator, has postponed infrastructure work until at least April 2025 due to the volatile security situation.
Posts on X reflect growing concern about the broader implications. One user noted, “Leviathan going offline doesn’t just hit Israel. It knocks Egypt’s feedstock, tightens European LNG balances, and pressures floating cargo availability globally.” Another warned of “major power outages” in Egypt if the shutdown persists. While these sentiments are not definitive, they highlight the interconnected nature of the crisis and its potential to reshape global gas markets.
For Egypt, the immediate priority is securing alternative supplies, but options are limited. The country may turn to Qatar or the United States for LNG, but delivery timelines and costs pose significant hurdles. Meanwhile, Jordan, which also relies on Leviathan for gas, faces similar risks, though its smaller demand may be partially met by Tamar’s output.
Looking Ahead
The shutdown of the Leviathan gas field marks a critical juncture for Egypt and the broader region. If the closure is short-lived, Egypt may weather the storm with minimal long-term damage. However, a prolonged disruption could plunge the country into an energy crisis, with cascading effects on its grid, industries, and economic stability. The Egyptian government’s ability to navigate this crisis will depend on its success in securing emergency supplies and managing domestic demand.
For the global energy market, the Leviathan shutdown is a wake-up call about the vulnerabilities of relying on geopolitically sensitive supply routes. As tensions in the Middle East show no signs of abating, the Eastern Mediterranean’s role as a reliable energy hub hangs in the balance. Energy News Beat will continue to monitor this developing story and its far-reaching consequences.
Sources: OilPrice.com, Reuters, Bloomberg, S&P Global, X posts
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The post Israel Shuts Down Leviathan Gas Field, Choking Natural Gas Supply to Egypt appeared first on Energy News Beat.
