Private Egyptian concerns can now negotiate directly with Israeli natural gas suppliers.
Another milestone has been reached on the road to exports of natural gas from Israel to Egypt. Egyptian President el-Sisi has signed a law allowing private concerns to import natural gas directly, rather than through the Egyptian Natural Gas Holding Company (EGAS), a government company, while using EGAS's existing infrastructure. The law, which has been discussed in Egypt since 2012, means that private players will be able to negotiate directly, making it possible to expedite natural gas deals with Egypt. Up until now, EGAS has been the sole importer of gas to Egypt, and has been marketing it to private concerns.
Market sources say that the law removes one of the barriers preventing implementation of a contract for exporting gas from Israel to Egypt.
The natural gas partnerships developing the Tamar and Leviathan natural gas reservoirs have signed an agreement to export gas to Egypt. A binding agreement was signed with Tamar enabling Israel to export all of its remaining surpluses, amounting to 1 BCM, for a relatively short 6-7-year period. An agreement in principle was signed with Leviathan for supplying up to 4 BCM for a 10-year period. The value of these agreements is estimated at over $15 billion.
In order to implement these two agreements, the gas partnerships must solve two problems: finding suitable infrastructure and getting a green light from the Egyptian government. When the second problem is solved, the partnerships can proceed with a solution of the infrastructure problem.
"Opening the door to the Israeli gas market"
Israel is currently connected to the Egyptian gas transportation system through Jordan, but there is another possibility - using the old gas pipeline from the Suez Canal via El Arish to Ashkelon, which was built to import natural gas from Egypt to Israel. The plan is to reverse the direction of the gas flow in the pipeline in order to transport gas from Israel to Egypt. It is believed that gas will begin flowing to Egypt in 2019, in addition to the gas currently exported to Jordan. Eco Energy CEO, economic and strategy consultant, and Herzliya Interdisciplinary Center Institute for Policy and Strategy fellow Dr. Amit Mor says, "Allowing gas imports to the private sector is a supplement needed by the Egyptian economy, which is still suffering from a severe energy shortage, and reopens the door to exports from the Israeli market to our neighbors, headed by Jordan and Egypt."
Published by Globes [online], Israel Business News - on August 9, 2017 © Copyright of Globes Publisher Itonut (1983) Ltd. 2017