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Israel Approves $US 1.2+ Billion Natural Gas Export Deal to Egypt

Israel Approves $US 1.2+ Billion Natural Gas Export Deal to Egypt

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The Israeli government has given the approval Thursday to begin exporting natural gas to Egypt, according to the Israeli press. Meanwhile, Egypt awaits the result of its appeal of an international court’s ruling requiring it to pay $1.7 in compensation to Israel for halting gas supply in 2012.

Israeli Energy Minister Yuval Steinitz announced in a statement Thursday that Israel is set to sell five billion cubic meters of gas to Egypt over a span of seven years from the Tamar site off its Mediterranean coast.

Previously an importer of gas, Israel has recently established itself as an exporter following the discovery of the Leviathan offshore deposit and Tamar fields in 2009, which enabled the country to cover its domestic needs and shift its regional position in the resource market.

Egypt’s Dolphinus Holdings had signed a seven-year deal with the Tamar partners in March to buy at least $1.2 billion of natural gas, with a minimum of five billion cubic meters of gas to be sold in the first three years.

Dolphinus Holdings is a firm that represents non-governmental, industrial and commercial consumers.

According to the deal, the gas should be supplied from Israel through the existing pipeline operated by East Mediterranean Gas Limited (EMG). The decade-old pipeline was used to transfer Egyptian gas to Israel from 2008 until 2012 when the supply was halted.

However, the Jerusalem Post reported that East Mediterranean Gas Limited (EMG) had not agreed on Israel’s export deal to Egypt.

Tensions arose between Egypt and Israel regarding energy supplies after Egypt’s 20-year agreement to sell gas to Israel collapsed in 2012 due to repeated attacks by militants in the Sinai peninsula on the pipeline used to transport the gas. The attacks came in the context of political turmoil and security unrest following the 25 January uprising in 2011.

As a result of the halt in gas supply, Israel resorted to international arbitration to seek compensation. In early December, the International Chamber of Commerce (ICC) ruled in favor of Israeli companies, requiring the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS) to pay nearly $1.7 billion in compensation. Egypt appealed the ruling.

Despite earlier approval of importing gas from Israel by private Egyptian companies, Egypt decided to freeze import talks until a decision on its appeal of the Swiss Court’s ruling is made.

The Egyptian Minister of Petroleum had stated that private companies require the government’s approval for importing gas from Israel.

Israeli newspaper Haaretz mentioned that the Israeli Energy Minister’s approval comes despite ongoing arbitration in a petition filed in front of the Israeli High Court of Justice against Prime Minister Benjamin Netanyahu’s plan to develop Israel’s natural gas fields. The Court is due to hold a hearing on the matter on February 3.

The owners of the Tamar site have said that the export deal to Egypt still hinges on regulatory and other approvals, Reuters reported.

This content is from: Aswat Masriya

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