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Egyptian gas: Facts and theories

04/30/2012 18:42 By ZVI MAZEL

In canceling agreement with Israel, Egypt disregarded peace treaty, economic interests.

Pipeline that leads gas from Egypt to Israel

Photo by: REUTERS

Official declarations on both sides of the border tend to play down the impact of the cancellation of the sale of Egyptian gas to Israel. However what happened cannot be simply the result of a conflict between business partners. The contract to supply gas to Israel was signed in 2005 and was followed immediately by a memorandum of understanding in which the Egyptian government was guaranteeing “the continuous and uninterrupted supply of the Natural Gas contracted or to be contracted”. Therefore the cancellation of the deal can only be seen as a further deterioration of the relations between the two countries.

In today’s world, the supply of natural gas is a strategic issue for a number of reasons. Significant investments are needed; while the selling country enjoys substantial revenues, the buyer and its economy become dependent on a continuing supply. In the present case, the deal was advantageous for both sides. The natural gas from the offshore fields of Port Said had a mere hundred miles to go to El Arish and from there to Ashkelon, thus greatly reducing the cost of the infrastructure needed. (Turkmenistan’s planned contract to supply gas to Western Europe will entail a pipeline two thousands mile long, and enormous sums will be needed to build and maintain it).

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Egyptian gas: Facts and theories

In canceling agreement with Israel, Egypt disregarded peace treaty, economic interests.

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