Egypt to buy Israeli gas via Greek Cyprus

A report has revealed that Egypt may be looking to purchase Israel natural gas via Greek Cyprus in return for Israeli use of an Egyptian liquification plant.

Egypt to buy Israeli gas via Greek Cyprus

World Bulletin / News Desk

A report has raised new questions as to the reason for the ousting of the elected Egyptian president Mohamed Morsi on July 3.

According to the report, it is likely that the decision to oust Morsi was made over his refusal to honor agreements made with Israel during the reign of his predecessor Hosni Mubarak, and refusal to work with Israel in regards to natural gas reserves in the eastern Mediterranean’s Levant Basin.

During Hosni Mubarak’s era, Egypt agreed to supply Israel with 45% of its natural gas via a pipeline across the border from the Egypt’s Sinai city El Arish to Israel’s Ashkelon. However, this supply was cut-off after Mohamed Morsi came to power in 2012.

Despite being ousted in a military coup by Army General Abdel Fattah al-Sisi a year later, anti-coup resistence in the Sinai Peninsula has put the pipeline at risk, having come under attack by local rebels a number of times. Moreover, since 2012, Israel has found a substantial amount of natural gas reserves close to its shores, promising it the potential to become energy independent for the first time in its history. Meanwhile, in a reverse situation, Egypt has been facing a shortage of natural resources since Morsi was elected, forcing them to now consider purchasing natural gas from Israel.

Israeli officials have suggested reopening the El Arish-Ashkelon pipeline to now supply Egypt’s fuel demand. However, while a Brookings Institute showed that 46% of Egyptians supported renewing ties with Israel, 44% were against such a move. Should the post-coup government in Egypt enter into a direct transaction with Israel, it could lose its authority over half the population.

However, officials may have stumbled upon an agreement that would benefit both Israel and Egypt – by dealing indirectly via Greek-controlled southern Cyprus. As a strategic neighbor and ally of both Israel and Egypt in the eastern Mediterranean, Greek Cyprus is also becoming a main player in the exploration of gas reserves in the Levant Basin. The island's government has been involved in joint exploration projects with Israel in the region, and has granted drilling permission to Block 12 of the Aphrodite Field to U.S. state-owned firm Noble.

Israel has an interest in Greek Cyprus, as it not only promises them more access to the European market, but plans to begin building a liquification plant on the island in 2016 will allow Israel to supply the demand of the Far-Eastern nations for Liquified Natural Gas (LNG) for a cheap price. However, Israel has already began exporting natural gas, and in order to compete with Australia, Mozambique, the U.S., Canada and Russia, who have already offered to supply the Far-East with LNG by 2018-2020, Israel needs to act quickly and therefore cannot afford to wait for the Greek Cypriots to complete its project.

Israel has now set its sights on an Egyptian liquification plant. Under the leadership of Mohamed Morsi, it would have been very unlikely that Israeli LNG shipments would be allowed to pass through the Suez Canal en route to the Far-East, but since his ousting cooperation between Israel and Egypt looks likely to turn a new page. In return, Egypt could gain access to eastern Mediterranean natural gas supplies, but since Egypt lacks a regasification plant, it cannot benefit from the gas it liquifies. Therefore, the only way for Egypt to get this gas would be via the risky pipeline across between El Arish and Askelon, which would of course cause a stir in the Egyptian public.

Currently, Egypt gets its gas supply from Qatar, who the Egyptian Petrol Minister has accused of inflating the Egyptian market. He also revealed that Egypt is currently in talks with Greek Cyprus over purchasing natural gas. However, the Greek Cypriot government has is still in the process of exploring its own reserves and is negotiating a deal with Israel to supply the island with gas while exploration works continue. This means any deal between Egypt and Greek Cyprus would, at least in the short-term, be over Israeli reserves. Greek Cyprus may even decide to agree to supplying Egypt with natural gas in return for using Egypt’s liquification plant.

Although involving Greek Cyprus as a mediator for Egyptian-Israeli energy deals would mean longing out the process, it is likely that Israel will send its gas to the island, which will later be liquified in Egypt, only to return to Israel for export to the Far-East. That way, it will appear as if Egypt is buying gas from Greek Cyprus when it is in fact buying it from Israel, thus avoiding criticism from the Egyptian people.

None of this would have been possible under Mohamed Morsi, who was open in his stance against dealing with Israel, whether directly or indirectly. The Middle-East Monitor suggested that meeting Egypt's fuel needs could be the main reason for his ouster.

Last Mod: 29 Kasım 2013, 15:46
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