Israel rejects demand for higher Egyptian gas price

Deep differences remain between Israel and Egypt over Egypt’s demand to adjust the price of the natural-gas sharply upward.

By KOBY YESHAYAHOU/GLOBES
May 24, 2011 00:02
1 minute read.
A natural gas pipeline [illustrative].

A natural gas pipeline [illustrative].. (photo credit: Courtesy)

 
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Even though East Mediterranean Gas Company (EMG) said last week natural-gas deliveries to Israel should resume by the end of May, that is unlikely to happen. Egyptian daily Al Masry al-Youm reported Sunday that deep differences remained between Israel and Egypt over Egypt’s demand to adjust the price of the natural-gas sharply upward.

Egyptian Minister of Petroleum Abdallah Ghorab told the newspaper EMG has voiced reservations over price increases, while Israel completely rejects the suggestion. Formal negotiations are due to start within days.

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Ghorab said his ministry was handling the negotiations from a purely economic perspective, focusing on securing the highest profit possible for Egypt, regardless of political considerations.

He credited the Egyptian people for convincing the company to review the price before 2013, the earliest date allowed for a review as dictated by the deal signed between Egypt and Israel in 2009.

The paper quotes a senior EMG official as saying the Israeli side was sticking to the 2013 deadline because it knows the current deal has a higher value than that of other export contracts signed by the Egyptian government.

Last week, EMG shareholder Ampal-American Israel Corporation announced that repairs on the pipeline had been completed.

Technically, it was possible to resume Egyptian gas deliveries to Israel, it said, but the gas flow would only resume after the Egyptian government improved the security of natural- gas facilities in Sinai. Deliveries were expected to resume by the end of the month, it said.



EMG, the company responsible for Egypt’s natural-gas deliveries to Israel, built a pipeline from El-Arish in Sinai to Ashkelon at a cost of $460 million.

Deliveries began in 2008.

In 2010, EMG supplied 40 percent of Israel’s natural-gas needs, with Yam Tethys, owned by Noble Energy Inc. and Delek Group Ltd., supplying the rest.

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