Israeli group in talks to ship gas into Egypt via EMG pipeline
Courtesy: shutterstock.com
 

The operators of Israel’s Tamar Gas field have entered negotiations with a private firm to supply the Egyptian market with 5 billion cubic meters of natural gas over a three year period.

According to a statement released today by Israel-based energy firm Delek Group, it has signed a non-binding letter of intent to supply Egypt with 250,000 million BTUs per day for a period of seven years. The gas would be shipped from Ashkelon in Israel to Arish in Egypt, via an undersea pipeline owned by the Eastern Mediterranean Gas company that was originally built to ship gas from Egypt to Israel.

The gas is to be supplied on an interruptible basis, when surplus gas is available after meeting the Tamar partners’ other obligations. Delek says it believes the gas will be supplied to industrial consumers in Egypt. 

The price of gas is to be in line with Israel’s other gas export deals, and will be linked to global oil prices.

Any agreement reached would be subject to approval by both Egyptian and Israeli authorities, and would depend upon reaching a deal with EMG, the pipeline owners.

Delek’s partner in the deal is Dolphinus Holdings Limited, which Delek describes as “a consortium of major Egyptian non-governmental industrial and commercial gas consumers, gas distributors and entrepreneurs, headed by Dr. Alla Arfe.”

A company with the same name appears as a shareholder in an investment company registered in Luxembourg. According to Luxembourg’s registry, Dolphinus Holdings Limited is registered in the British Virgin Islands, a popular jurisdiction for offshore companies, and one that does not require companies to publicly list information about its ownership, management or financial affairs.

Although news of a deal comes at a time when Egypt is desperate to secure energy supplies, it is likely to prove highly controversial due to Israeli involvement.

In May, the operators of the Tamar gas field announced they had signed a letter of intent with Spanish firm Union Fenosa to liquefy Israeli gas at facilities in Egypt. The news set off a media firestorm and lead Egypt’s Cabinet release a statement denying that Egypt plans to import gas from Israel.

Today’s announcement is likely to face a similar response.

Under the Mubarak regime, Egypt sold gas to Israel at below market prices. According to a report released by the Egyptian Initiative for Personal Rights, underpricing due to corruption and negotiation saw Egypt lose US$200 million in its gas deals with Israel between 2005 and 2011.

EMG, partly owned by Egyptian tycoon Hussein Salem, is also alleged to have made huge profits from deals with Israel, purchasing gas at $3 per MMBTU of gas, then reselling it to Israel for around $4.5 per MMBTU, pocketing profit that could have gone to the national budget.

AD

You have a right to access accurate information, be stimulated by innovative and nuanced reporting, and be moved by compelling storytelling.

Subscribe now to become part of the growing community of members who help us maintain our editorial independence.
Know more

Join us

Your support is the only way to ensure independent,
progressive journalism
survives.