Tamar, Leviathan partners: Egyptian gas sale negotiations still underway

The negotiations are being conducted with commercial companies, not the Egyptian national gas companies.

Israel Navy missile ship patrols near gas field‏ (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Israel Navy missile ship patrols near gas field‏
A day after Egypt announced a freeze on Israeli gas import talks as a result of an arbitration settlement with the Israel Electric Corporation, the Tamar and Leviathan gas reservoir partnerships stressed that such threats will have no impact on negotiations.
“These negotiations are not being conducted with the Egyptian national gas companies, but with commercial companies,” the partners jointly reported to the Tel Aviv Stock Exchange on Monday.
“The partnership and its partners in the Leviathan project and Tamar project are in constant contact with these companies and are continuing these negotiations as planned.”
On Sunday morning, the IEC announced that arbitrators from the International Chamber of Commerce had decreed that the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC) would need to pay the Israeli company $1.76 billion, due to damages incurred when the two firms ceased supplying gas in 2012.
Later that evening, the Egyptian government responded by declaring that it would appeal the order, as well as freeze gas import talks with Israel, until the matter was resolved.
In 2008, EGPC and EGAS began selling gas to the IEC, through the Eastern Mediterranean Gas Company pipeline – supplying Israel with about 40 percent of its natural gas provisions. Yet 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.
The Tamar and Leviathan partners emphasized that they are in no way party to any of the arbitration proceedings, and that they are continuing to promote negotiations on Israeli gas exports to neighboring countries, including Egypt.
“The parties will continue to work with the relevant authorities in the Israeli and Egyptian governments to receive all necessary permits related to gas supply deals from Israel to Egypt,” the stock exchange statement said.
The partners warned, however, that their statements regarding the negotiations constitute “forward-looking information” alone and that there “is no certainty that they will materialize, in whole or in part,” into full-fledged deals.
“In particular, there is no guarantee that the negotiations will mature into binding gas sale agreements and that the conditions required by law for the entry of such agreements into force will exist,” the partners concluded.
While full-fledged deals have not yet been realized, several letters of intent between the Israel reservoir developers and companies in Egypt have been signed.
Two weeks ago, the Leviathan partners signed a letter of intent with the Egyptian company Dolphinus Holdings, to negotiate the export of as much as 4 billion cubic meters of gas annually to the latter for 10-15 years, through the defunct EMG pipeline.
The Tamar partners signed a similar letter with the same Egyptian firm in March, for the provision of gas for seven years – and a minimum of 5 bcm during the first three years of the contract.
Despite announcements made by Dolphinus and the Tamar and Leviathan partners, representatives of EMG have consistently denied that any such talks were taking place.
Aside from the Dolphinus negotiations, however, the Tamar partners signed a 15-year letter of intent in May 2014 for the provision of 71 bcm to the Spanish Union Fenosa liquefied natural gas 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.
At the Globes Israel Business Conference on Monday, National Infrastructure, Energy and Water Minister Yuval Steinitz explained, “The State of Israel, according to Israeli law, cannot intervene in legal proceedings between the IEC and Egyptian companies.”
“We have been evaluating, over the past few months, the sale of gas not only to Egypt but also to Jordan, Greece and in the distance future – to Turkey,” he said. “Relations with Turkey were once good and we have to think about how to renew them. The options of gas exports – there’s no need to cancel them. This is a good option.”
Steinitz expressed his hopes “that thanks to the close bilateral relations with Egypt, it will be possible to continue to move forward on the gas issue during the coming period.”
Globes contributed to this report.