CAIRO: A new deal was signed Tuesday to export Egyptian natural gas to Israel, an agreement that will last at least 17 years, Israeli press reported.
On Tuesday the Egyptian-Israeli consortium Egyptian Mediterranean Gas (EMG) finalized terms on a new deal to supply gas to the Israeli company Dorad Energy, an agreement that was initially struck in 2007.
The terms of the new deal are that EMG will supply around 12.5 – 16 billion cubic meters of gas to Dorad Energy over a period of 17 – 22 years at a cost of $2.1 – 3.3 billion.
EMG is a private company whose main Egyptian stakeholder is businessman Hussein Salem. The Israeli government offered support in helping frame the agreement between EMG and Dorad Energy.
The original gas deal with Israel was met with vehement local opposition, namely because of the initially favorable price, spearheaded by the popular campaign to prevent the export of Egyptian gas.
“This is a provocation, member of the campaign Abdallah Helmy told Daily News Egypt about the new deal, “and they [the government] have no one to blame but themselves after this, they are rubbing our noses in it.
Ibrahim Zahran, the petroleum expert for the campaign, told Daily News Egypt, “Currently, Egypt produces enough natural gas to cover local use and exports. If we export more gas we will have a deficit and have to pay for other sources of energy at a higher cost to cover this deficit.
“The Egyptian people pay the difference, why are we subsidizing the Israeli consumer? How is that in our interest? he added.
According to Zahran, Egypt is selling the gas to Israel for the price of $1.25 per thermal unit while it sells gas to Syria, for example, at $5.25 per thermal unit. “Syria is our enemy apparently while Israel is our friend, he said.
Just this past Monday the campaign held another protest against the initial gas deal to Israel.
“The government is in a valley and the people in another valley. After our protest on Monday where we again said no to the deal, they sign a new one the next day, Helmy said.
The campaign has been pursuing the matter in court, but was dealt a severe blow last April when the Cairo Court for Urgent Cases ruled for overturning the Administrative Court decision to ban the exportation of Egyptian natural gas.
Dorad Energy intends to use the gas to construct the largest private power station in Israel with a capacity of 800 megawatts. The station is due to be completed in 2010.
The original deal was struck in a memorandum of understanding signed in 2005 between the two countries. The contract was initially for 15 years guaranteeing a supply of 1.7 billion cubic meters a year at the price of $1.5 per million BTU (British Thermal Units).
In June, Egypt increased the volume of gas exported to Israel after agreeing to an increase in the price.
Egypt and Israel agreed to look into expanding economic ties after Foreign Minister Ahmed Aboul Gheit met with Director General of the Israeli Foreign Ministry Yossi Gal in Cairo Monday.
Aboul Gheit and Gal agreed to cement bilateral dialogue between Egypt and Israel as well as reinforce economic ties and expand joint activities.
The Israel gas deal was “a loss from the start and now [with this new deal] it is a bigger loss, Zahran said.
