Egyptian minister: Gas export negotiations with Israel ongoing

Egyptian minister: Gas export negotiations with Israel ongoing

Sherif Ismail says massive offshore find won’t affect private companies’ deals, but does not address government’s plans

An aerial view of an Israeli offshore gas rig (Albatross Aerial photography/Noble Energy/Flash90/File)
An aerial view of an Israeli offshore gas rig (Albatross Aerial photography/Noble Energy/Flash90/File)

Egypt’s petroleum minister on Thursday said the discovery of a massive offshore field won’t affect ongoing negotiations between private Egyptian companies and Israel over gas exports from the Leviathan field. But he remained silent as to his government’s plans to purchase gas from Israel, amid speculation that Cairo could back away from agreements.

His message came days after news broke that the region’s “largest ever” natural gas field was discovered in Egypt, casting doubts on the viability of the current deal between the government and a US-Israeli energy consortium that has been stalled for months due to an ongoing regulatory and political dispute.

“Any negotiations between private companies in Egypt and in the eastern Mediterranean, and by this I mean Israel and Cyprus, will not stop,” Petroleum Minister Sherif Ismail told Reuters. “These negotiations and initial agreements are ongoing.”

Ismail said private companies seeking to purchase gas from Israel would need the government’s approval, adding that Cairo does “not object” to these plans.

He assessed that the gas field, discovered by the Italian gas company Eni, will be developed by 2018, producing between 2.5 and 3 billion cubic feet of gas per day.

“We have not yet agreed with Eni over the price of the gas …but the important thing is it’s a number appropriate for both parties …It’s not a condition that it be the same number agreed upon in other deals,” he said.

Israel’s Economy Minister Aryeh Deri on Tuesday said that Energy Minister Yuval Steinitz was responsible for a “first-class intelligence failure” that left Israeli officials in the dark about the discovery of the massive natural gas reserve off the Egyptian coast earlier this week.

Economy Minister Aryeh Deri speaks with Energy Minister Yuval Steinitz during a plenum session in the Knesset on June 17, 2015. (Miriam Alster/FLASH90
Economy Minister Aryeh Deri speaks with Energy Minister Yuval Steinitz during a plenum session in the Knesset on June 17, 2015. (Miriam Alster/FLASH90

Deri said that while Israel worked to finalize a contentious agreement regarding its own sizable reserves in the Mediterranean Sea, cabinet ministers were unaware that Egypt — a potentially major Israeli energy client — was exploring its own offshore gas reserves, Channel 10 reported.

Earlier this year, the Wall Street Journal reported that Egypt was considering importing natural gas from Israel if its price was low enough and if one of the drilling companies dropped its legal action against the Egyptian government. Stakeholders in Israel’s Tamar gas field signed a contract earlier this year with a private Egyptian concern to sell as much as five billion cubic meters of gas to Egyptian companies over the next three years.

The US company Noble Energy and its Israeli partner Delek Group have faced a political backlash in recent months over a proposed deal with the government to develop of a number of sizable natural gas reserves discovered in Israeli waters in recent years.

The deal has been controversial, with critics, including former antitrust commissioner David Gilo, expressing concern that the deal created a de facto monopoly that would lead to high gas prices for Israelis.

The issue was thrown into the spotlight when Gilo, while still antitrust commissioner, said last year that the Noble-Delek partnership resembled a monopoly, and called for opening Israel’s natural gas market to increased competition. Gilo tendered his resignation in May over the dispute.

Prime Minister Benjamin Netanyahu has championed the controversial deal, saying it would pump billions of shekels into the economy.

On Monday, the prime minister announced that a parliamentary vote on the deal would be temporarily delayed until a new antitrust commissioner was appointed.

Deri, who can override the the commissioner and approve the deal between Israel and Noble-Delek, told Knesset reporters last week that he would refrain from exercising his authority in the matter and would await the new appointment.

On Sunday, Steinitz said Egypt’s discovery should serve as a wake-up call for Israel to finalize the agreement on its own reserves in the Mediterranean. He called the find a “painful discovery” and said the state was sleepwalking in the face of a rapidly changing world, and that this foot-dragging would have ramifications for Israeli exports.

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