ENERGY

Deal worth $15 bln to allow Israeli gas exports to Egypt

File photo of an Egyptian gas-pumping station in al-Shulaq along Egypt's natural gas pipeline in northern Sinai . (AP)

A US-Israeli consortium leading the development of Israel’s offshore gas reserves announced Thursday a deal that would enable the export of natural gas to Egypt.

Noble Energy and its Israeli partner Delek, along with Egyptian East Gas Company, bought 39 percent of a disused pipeline connecting the Israeli coastal city of Ashkelon with the north Sinai.

The consortium paid $518 million for the interest in the East Mediterranean Gas Company pipeline.

The mainly undersea pipeline will be used to transport natural gas from the Tamar and Leviathan reservoirs to Egypt from as early as 2019, allowing a 10-year $15 billion deal signed in February with Egypt’s Dolphinus to move forward, Delek said in a statement.

It will be the first time Egypt, which in 1979 became the first Arab country to sign a peace treaty with Israel, imports gas from its neighbor.

Israel had bought gas from Egypt but land sections of the pipeline were repeatedly targeted by Sinai extremists in 2011 and 2012, and soaring demand meant Egypt could use the gas domestically.

In February, Egyptian President Abdel Fattah al-Sisi said that the Egyptian government is not a party to the recent gas agreement with Israel. Read more

Delek CEO Yossi Abu called the pipeline purchase “the most significant milestone for the Israeli gas market since the discoveries” of the reservoirs.

“The Leviathan reservoir is becoming the Mediterranean basin’s primary energy anchor, with customers in Israel, Egypt and Jordan,” he said.

In September 2016, Jordan struck a deal to buy 300 million cubic feet of Israeli gas per day over 15 years, an agreement estimated to be worth $10 billion.

Israel has limited natural resources but in the past few years it has discovered major gas fields off its coast and is building the infrastructure needed to tap them.

Tamar, which began production in 2013, has estimated reserves of up to 238 billion cubic metres.

Leviathan, discovered in 2010 and set to begin production in 2019, is estimated to hold 535 billion cubic metres of natural gas, along with 34.1 million barrels of condensate.

Israel hopes its gas reserves will give the country energy independence and the prospect of becoming a supplier for Europe as well as forging strategic ties within the region.

Last week, Cyprus, whose offshore reserves border those of Israel, signed a deal paving the way for construction of an undersea pipeline to liquefied natural gas facilities in Egypt to enable production to be re-exported to Europe.

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Last Update: Thursday, 27 September 2018 KSA 15:55 - GMT 12:55
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