Steinitz approves first gas export deal to Egypt

"After years of debate and delay, we are beginning to move forward, and to position Israel as a natural gas super power in the region," Steinitz said on Wednesday.

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December 23, 2015 22:00
2 minute read.
tamar gas

Tamar gas field‏. (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

 
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National Infrastructure, Energy and Water Minister Yuval Steinitz on Wednesday approved the first deal to export gas from Israel to Egypt.

The seven-year agreement signed between the Tamar reservoir partners and Egypt’s Dolphinus Holdings Ltd. in March aims to convey 5 billion cubic meters of gas through the now defunct East Mediterranean Gas pipeline, which used to bring gas in the opposite direction from Egypt to Israel. EMG, however, has repeatedly denied its involvement in or recognition of such a deal.

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In addition to the fact that EMG continues to reject the agreement between the Tamar partners and Dolphinus, the gas export arrangement also may face some hurdles within the Egyptian government.

In 2008, two Egyptian national gas companies began selling gas to the Israel Electric Corporation through the EMG pipeline – supplying the country with about 40 percent of its natural gas provisions.

But saboteurs began thwarting the flow through Sinai pipeline explosions in 2011, which ultimately led the Egyptian government to terminate the gas sale agreement with Israel in April 2012.

Earlier this month, the International Chamber of Commerce awarded the IEC $1.76 billion in compensation from the Egyptian national gas firms, prompting the Egyptian government to declare a freeze in gas import talks with Israel.

Nonetheless, Steinitz maintained that authorizing gas exports to Egypt is “a sign of cooperation in energy that will develop in the coming years with countries in the region, such as Egypt, Jordan, Greece and Turkey – and with European countries in general.”

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“After years of debate and delay, we are beginning to move forward, and to position Israel as a natural gas super power in the region,” Steinitz said on Wednesday.

In mid-November, the Leviathan reservoir partners signed a letter of intent with Dolphinus, as well, to negotiate the export of as much as 4 billion cubic meters of gas annually for 10-15 years through the EMG pipeline. At the time, representatives of EMG, likewise, denied that any such talks were taking place.

Aside from the Dolphinus deals and negotiations, the Tamar partners signed a 15-year letter of intent in May 2014 to provide 71 BCM to the Spanish Union Fenosa liquefied natural gas (LNG) production plant in Damietta, Egypt.

Meanwhile, in June 2014, the Leviathan partners signed a letter of intent for the 15-year supply of 105 BCM to the empty British Gas liquefaction plant in Idku.

Also in the gas sector on Wednesday, Steinitz announced that he was appointing a professional team to guide the implementation of the country’s natural gas outline – which was officially activated by Prime Minister Benjamin Netanyahu last week.

Leading the inter-ministerial team will be Energy Ministry Director-General Shaul Meridor, with the participation of Petroleum Commissioner and Natural Resources Administration Director Yossi Wurzburger; Natural Gas Authority director Alexander Varshavsky; Finance Ministry Budget Department Director Amir Levi; incoming National Economic Council Chairman Avi Simhon; Environmental Protection Ministry Director- General Yisrael Dancziger; Economy Ministry Director- General Amit Lang; and Deputy Attorney-General Avi Licht.

The team has been tasked with ensuring that country’s natural gas companies are complying with the terms of the outline, and will be required to file quarterly progress reports to the ministry.

“Finally, after years of discussions and delays, we are taking practical steps to develop natural gas in Israel,” Steinitz said.

“The team, which includes senior officials from relevant ministries to advance the matter, will ensure the removal of possible obstacles to expected development.”

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