CAIRO: Ampal-American Israel Corporation said Tuesday that the Egyptian gas valve station damaged by an attack on April 27 has been repaired and is ready for gas transmission.
The East Mediterranean Gas Company (EMG), in which Ampal holds a 12.5 percent stake, advised the company that the gas valve is expected to be up and running once again by the end of the month.
“EMG was advised that the government of Egypt has been implementing additional security measures for securing its gas transportation system in Sinai from further attacks,” said Ampal in a statement.
However, Noran Ali, petroleum analyst at CI Capital, told Daily News Egypt that the heightened security is not exactly the main concern surrounding this issue.
“Its not about additional security measures, it doesn’t sound like a good idea to resume gas to Israel when you have this kind of need at home,” she said. “The idea of resuming gas to Israel is going to have pressure on the current government because in Egypt, we have rising a problem with diesel and you can replace diesel with natural gas.”
The legality and the pricing of the transaction also poses as a problem for the gas line going to Israel.
Under the auspices of former Minister of Petroleum Sameh Fahmy, who is currently under investigation along with other figures of the previous regime for corruption allegations and squandering of public funds, the pipeline continued to operate despite criticism from the Egyptian public.
“We don’t have a clear export price, it hasn’t been officially announced, but it is said to be about $3, which is below the international standard price of $4,” said Ali.
“This has been a problem in the petroleum sector, the old regime was reluctant to disclose prices, and it was a taboo to even ask about this information, you wouldn’t get an answer.”
The gas line, which also serves Lebanon, Jordan and Syria, was attacked for the first time on February 5, during the events of Egypt’s 18-day popular uprising that began on January 25 and eventually forced Hosni Mubarak out of power after three decades.
“The physical costs from the first bombing reached about LE 20 million. These were preliminary figures, this time it maybe different because they may have bombed the hub, right where there is a line going to Israel,” said Ali.
After the first attack, the gas flow to Israel did not resume until March 16.
Furthermore, Ali says if Egypt used its gas resources instead of relying heavily on petroleum or diesel, there would be better results in the sector for the longer term.
“Economically speaking, gas is better for us; it’s cheaper and environmentally friendly,” said Ali. “We have a reserve for natural gas, but our oil reserves are declining.”
Ali also pointed out that since this has been an ongoing conflict, the resumption of gas to Israel, without the appropriate revisions, would continue to pose problems and put pressure on the current government during this transition.
Despite a previous Egyptian court ruling that the transaction to Israel is illegitimate, the gas exports continued.
“I think the problem is, there was a previous court rule that banned the deal,” Ali added. “This deal was signed between two private companies, EMG and Ampal, when they should’ve referred to the parliament, and two or three years ago, this was rendered constitutionally wrong.”
Egypt’s current Petroleum Minister Abdullah Ghorab said in March that talks are underway to adjust the gas contracts, adding that widespread public disapproval of the gas export to Israel are enough to make the government revisit the contract’s terms.
Calling it an “unfair deal with an enemy of the people,” critics and activists have repeatedly accused the government of wasting one of Egypt’s main resources by importing the gas to Israel at an undervalued price.
“This illegal deal should be cancelled immediately,” said Ahmed Fouad, activist and fourth year business student at Ain Shams University. “People do not want it, and what the people want must be respected.”
Ali, on the other hand, says that the gas may resume now, however, it is unclear what could happen in the future.
“It’s the idea whether we’ll really be able to resume the export… maybe if they resume it will be for a short time, until they face another challenge,” she said. “The government has already started to revise the Jordan side of the deal, maybe Israel is next.”
In 2008, EMG constructed the pipeline from El Arish in Sinai to Ashkelon at a cost of $460 million. The company provides 45 percent of Israel’s gas needs for electric utility.
