Israeli firm writes off investment in Egypt gas deal

Ampal-American Israel Corp. said this week that it had concluded its portion of East Mediterranean Gas Company to be of no value.

May 18, 2012 01:48
2 minute read.
BEDUIN man looks at a gas pipeline in Sinai

BEDUIN man looks at a gas pipeline in Sinai 370. (photo credit: REUTERS)

The Israeli partner in the natural gas consortium with Egypt has written off its entire investment, while a US energy giant said it would link two small gas fields to Israel’s central supply to help offset the damage.

Ampal-American Israel Corp. said this week that it had concluded its portion of East Mediterranean Gas Company to be of no value, after a string of attacks on the gas pipeline over the last year and Cairo’s subsequent severance of the gas flow altogether. Egyptian authorities claimed their Israeli partners had fallen behind on payments.

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On Wednesday, a spokesman for Noble Energy said it intends to connect two small natural gas fields off Israel’s southern coast to the country’s central gas supply to avoid summer electricity shortages due to the cut-off.

Spokesman Binyamin Zomer told the AFP news agency that Noble had drilled in the Noa and Pinnacle gas fields off the coast of Ashdod. He said the company planned to connect the gas fields by pipeline to the nearby Mari-B platform, and from there to the shore.

“It’s something that we’ve done in order to mitigate the absence of Egyptian gas. The government wants us to do it, our customers want to do it and we wanted to do whatever we could to make sure that gas was delivered to the Israeli market,” he told AFP without specifying how much gas the fields would produce.

Israel generates 40 percent of its electricity from natural gas, and before the fall of Egyptian president Hosni Mubarak last year, received 43% of that gas from its western neighbor.

On Wednesday, news emerged that Cairo had resumed its gas supply to Jordan.

The past year’s pipeline attacks in Sinai have halted deliveries to both Israel and Jordan for months. Still, this week’s resumption of gas flow to Jordan has not been matched by a similar commitment to Israel.

The Egyptian Natural Gas Company announced that deliveries to the Hashemite kingdom will gradually increase from 500 million cubic meters a year to more than 1.5 billion cubic meters.

Brenda Shaffer, an energy policy and management expert at the University of Haifa, said Egypt’s gas economy remains precarious.

“I always thought export was unsustainable because Egypt doesn’t produce enough gas,” she told The Jerusalem Post. “A country with blackouts cannot allow itself to export gas.”

Egypt produces 70% of its electricity from natural gas, Shaffer said, and production levels are constantly diminishing.

“The writing was on the wall,” she said. “No country is going to export gas when they can’t meet their own needs.”

Globes contributed to this report.

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