I told you so, says ex-energy minister about Egypt gas cut

I told you so, says ex-energy minister about Egypt gas cut

Joseph Paritzky also blames ‘too much red tape’ for the delayed production from Israel’s own offshore gas fields

Raphael Ahren is the diplomatic correspondent at The Times of Israel.

File: Former national infrastructures and energy minister Joseph Paritzky in 2004. (Flash90)
File: Former national infrastructures and energy minister Joseph Paritzky in 2004. (Flash90)

Israel’s former energy minister, who in 2004 opposed the impending natural gas deal with Cairo because he was wary of the regime’s reliability, says Egypt’s decision this week to cut supplies to Israel vindicates his stance.

“I’m sorry that I was right. I am deeply sorry for the citizens of Israel and for the energy market in Israel that I was right,” said Joseph Paritzky, who served as national infrastructure and energy minister from 2003 to 2004.

Instead of turning to Egypt for Gas, Paritzky says Jerusalem should have helped the Palestinians develop a gas field off the Gaza shore,

Earlier this week, Egypt unilaterally canceled its agreement to supply Israel with natural gas, a development that according to politicians from both countries is the result of a commercial dispute but that some analysts say clearly shows the deterioration of bilateral relations.

In 2004, the government of Ariel Sharon was looking for a second supplier of natural gas, in addition to an Israeli-owned offshore field. According to Paritzky, who belonged to the now-defunct Shinui party, there were two options: buying gas from the regime of Egyptian president Hosni Mubarak or from a still undeveloped gas field under the control of the Palestinian Authority.

“I didn’t want to give a monopoly to any of the parties involved,” Paritzky told The Times of Israel on Tuesday. “I wanted to purchase gas from Egypt and from the Palestinians in order to widen as far as possible the supplies of natural gas to Israel.”

Paritzky said it was evident the government’s decision was flawed long before this week’s supply cutoff, since the Egyptians (successfully) demanded price hikes and did not deliver gas according to the agreement.

The former minister — who was ousted from Shinui in 2004 due to intra-party strife — also opposed the Egyptian gas deal because Cairo was unwilling to sign an internationally recognized contract with the Israeli government, he said.

“It’s not even that an Israeli company contracted with the Egyptian gas company to purchase gas,” he said. Instead, the pipeline delivering the gas to Israel was operated by Eastern Mediterranean Gas, or EMG, a company serving as broker between the two countries. EMG itself owns no gas fields but was merely formed to represent the Egyptian Natural Gas Holding Company in the gas deal with Israel.

‘Had we worked fast enough in the past maybe today we wouldn’t have even felt the cessation of the supply from Egypt at all because Tamar and Leviathan would have been able to be developed by now’

“This whole scheme looked very unstable, very weird to me,” Paritzky said. “That is why I was against it. I requested a commitment from the government of Egypt, actually a treaty, and they declined to provide it. To this day, they haven’t signed any international agreement with Israel to supply gas.”

Dr. Brenda Shaffer, a Haifa University expert on Israel’s energy policies, agreed with Paritzky that it was unwise to bet on one horse alone, especially since it was not a secret that Egypt increasingly needed its gas for its own purposes.

“The Egyptians also have a lot of problems with their production of natural gas; it’s been down while their domestic consumption has been going up. The gap of what they need for themselves and what they can export is getting smaller every year,” she said. “The writing was on the wall: Israel should have been concerned about the numbers in Egypt. Every consumer of gas always has to look at the supply situation of the producer.”

However, she added that Israel had other energy sources to fall back on already back then, such as the gas produced by the Yam Thetis consortium. Overall, the Israeli government needs to be commended for the way it has been managing the current energy crisis, she said.

“The system is working. The fact that the government has in place dual fuel plans and is able to bring in the fuels and to transport them across the country [means] the glass is not just half-empty, there is another story here, too. The IEC [Israel Electric Corporation] is actually functioning quite well, it’s providing electricity despite the lack of the Egyptian gas.”

Nonetheless, TheMarker reported Wednesday that the IEC is scrambling to look for a new provider of natural gas to Israel. According to the paper, the company published an international tender, looking to buy as much as $850 million worth of natural gas by the end of the year.

And Shaffer also said that developing the gas off Gaza would have been — and could still be — a win-win for both Israel and the Palestinians, from an economic and an environmental viewpoint.

Currently the Palestinian gas fields lie desolate because Israel until recently refused to permit production for security reasons.

“There has been exaggerated concern in Israel that if we allow them to develop this gas field, the money would go to Hamas,” Shaffer said. “It’s a small field, there’s no export potential, it’s basically enough to provide a cleaner form of electricity for 15-20 years to the people of Gaza. It’s not like more would go to the pockets of Hamas, just less money would leave their pockets to pay for electricity to Israel.”

According to industry experts, Israel will be able to cover its energy needs quite soon after the offshore Tamar field — which contains 250 billion cubic meter of natural gas — starts producing.

But Paritzky, who today is involved in private energy projects, working mainly out of Texas, said the field should have been ready much earlier.

“Because of bureaucracy and a lot of red tape, we delayed the development of the gas fields that are in our territory,” the former minister lamented. “Had we worked fast enough in the past, maybe today we wouldn’t have even felt the cessation of the supply from Egypt at all because Tamar and Leviathan [another large natural gas field off Israel’s coast] would have been able to be developed by now.”

There are still no reception and treatment terminals for natural gas in the northern area of Israel, which could have been a installed a long time ago, Paritzky said, adding that the infrastructure to transport the gas from the sea to the mainland has been developed poorly. “We need to expedite the proceedings as much as possible in order shorten the period where we have a lack of gas,” he said.

But Sheffer defended the Israeli authorities, commending them for not rushing into a decision about important matters. The creation of inter-ministerial committees to determine the future of Israel’s energy policy “was an important precedent,” she said.

It was commendable that the government “took a breather and tried to resolve competing interests in a professional fashion,” she said. “This is one of the only cases I know of where a country sat down and said: Ok, we have this natural resource, and before we start squandering it, let’s sit down and look at all the different interests and try to set a policy.”

It was true that the government spent too much time with the committees as opposed to working on bringing Tamar on shore quickly. “But these are very serious decisions. You don’t want to deal with them like it’s a quickie,” she added. “They say in the industry that oil deals are a one-night stand and gas is a marriage. It’s a very complicated because you have long-term contracts and infrastructure.”


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