Egyptian Prime Minister Sherif Ismail has announced that permits will no longer be issued to companies importing gas from Israel, or cooperating with Israeli companies on natural gas deals.
Ismail also announced the suspension of negotiations between private Egyptian and Israeli companies on gas imports, pending a decision on Egypt’s appeal against an International Chamber of Commerce (ICC) ruling.
The ICC has ordered the Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corporation (EGPC) to pay Israel Electric Corporation (IEC) and Eastern Mediterranean Gas (EMG) US$1.76 billion and US$288 million respectively for damages caused by halting the supply of Israeli gas to Egypt.
Supply of gas to Israel was restricted in 2012, following recurrent attacks EMG’s pipelines in the Sinai Peninsula and constraints on Egyptian domestic supply.
An appeal is expected to be made against the ICC ruling in the Swiss courts within six weeks.
Related: Eastern Mediterranean Oil & Gas: The View from Egypt
Israeli Prime Minister Benjamin Netanyahu is to send a special envoy to Egypt to try to resolve the issue.
The Egyptian moves will shelve potential imports from Israel’s Leviathan gas field, managed by a consortium of consortium of the USA’s Noble Energy, and Israel’s Avner, Delek, and Ratio. Leviathan signed a Letter of Intent with Egyptian counterpart Delphinus last month for a US$10 billion supply of four billion cubic metres of gas per annum to Egypt over the next 10 to 15 years.
A similar deal had been signed between Delphinus and the Tamar gas field partners in March.
Agreements on Israeli gas supply to Egypt had been signed between Leviathan and the UK’s BG Group terminal in Idku, as well as between Tamar and Spain’s Union Fenosa plant in Damietta.
Industry Perspective
Those in the industry should position themselves for other long-term prospects. The ruling will not affect the Zohr natural gas field, the Mediterranean’s largest ever offshore gas field discovered recently by Italian energy giant ENI.
Long-term investor confidence should also be boosted by issuance of a joint statement this week by Cypriot, Egyptian and Greek leaders on resolving outstanding maritime border issues, and potential to export natural gas directly to the EU. Cyprus and Egypt have signed an MOU on potential exports to Egypt from Cyprus’ Aphrodite field through an undersea pipeline.
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