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00:24, 19 June 2018 Tuesday
09:36, 23 February 2018 Friday

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Israel, Egypt gas agreement
Israel, Egypt gas agreement

Deal does not mean much unless countries resolve arbitration case, define pipeline route and get licenses: OME hydrocarbons Dir.

World Bulletin / News Desk

The recent natural gas agreement on Monday between Israel and Egypt is more symbolic than viable with the aim of fabricating a gas market in Egypt to send a message that Jordan is not Israel's only market in the region, according to the director of hydrocarbons at the Paris-based Mediterranean Energy Observatory (OME).

The agreement is mired with difficulties given that the arbitration case, in which Israel Electric Corporation (IEC) was awarded $1.8 billion in compensation for the halt of gas supplies from Egypt in 2011, is not fully resolved as no compensatory payment has been made yet. In retaliation for the arbitration, Egypt froze talks on gas imports from Israel and Tel Aviv turned to other options.

According to Egypt's energy minister back in November, the country will not issue permits to companies to import natural gas from Israel as long as the arbitration case remains unresolved.

"The agreement does not mean much, Israeli gas cannot reach Egypt before all parties solve the arbitration problem, determine a pipeline route and obtain permits and necessary approvals from the Egyptian authorities," Director Sohbet Karbuz told Anadolu Agency in an exclusive interview. 

So far, there is no tangible data revealing a solution to the arbitration results, neither has a pipeline direction been chosen nor any license applications made. Therefore, all particulars about this agreement are left up in the air, and there is only the announcement of the agreement which is similar to those made in October 2014 and November 2015, Karbuz said.

Noble and Delek, energy partner companies in Israel's Tamar and Leviathan offshore gas fields announced on Monday that they would supply an Egyptian private energy company with 64 billion cubic meters of natural gas over the next 10 years. Both companies failed to furnish any details other than the cost and the timeframe of the project.  

Israeli Prime Minister Benjamin Netanyahu hailed the deal in a statement but did not clarify whether the agreement is a preliminary or final agreement between the countries or private companies.

In response to the agreement's announcement, Egyptian President Abdel-Fattah al-Sisi said Wednesday that his government was not part of the natural gas agreement inked between Israeli and Egyptian private companies.

- Egypt: not only a gas market but a competitor

With the nebulous $15 billion deal, Israel wants to give a message to Jordan suggesting that Egypt could now become another alternative route for Israeli gas, while urging Jordan to comply with the previous deal with Israel with Jordan's National Electric Power Company (NEPCO), according to Karbuz.

Demonstrations were held in Jordan in October 2016 in protest against the natural gas deal between Israel and Jordan's NEPCO, the only potential gas buyer in the region for Israeli gas, Karbuz explained.

Now Israel wants to avail of the opportunity of regaining a market share in Jordan before Egypt gets back on its feet to become a rival gas exporter to Israel, he added. 

"Egypt is preparing to become a gas exporter by 2020 with international companies conducting upstream activities in the Zohr field and several other fields, but Jordan would prefer to buy cheaper natural gas from Egypt," Karbuz said.

The Zohr field, offshore Egypt, is seen as the largest gas discovery in the Mediterranean, while operator and discoverer company Eni confirms that there is potentially a total of 850 billion cubic meters of gas in place.



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