Israeli energy minister's statements evoke Egyptian government's silence

(MENAFN- Daily News Egypt) The Egyptian government has remained silent on the Israeli minister of energy's statements that Egypt has to import gas from Tel Aviv at approximately $7-$8 per million thermal units.

A senior official told Daily News Egypt that Egypt has to import gas from Israel to operate the liquefaction plants at EDCO and Damietta. The plants have been at a standstill for over a year due to gas shortages.

He said that the Israel and Cyprus pipelines are the only ones offering gas at suitable prices, because the distance between Egypt and their production fields could be linked by maritime pipelines.

He added that the Egyptian government fears the political consequences of importing gas from Israel. On the other hand, due to the economic situation, importing would save at least $4 for one million thermal units imported from Tel Aviv, instead of the currently imported liquefied gas.

The Israeli minister, Yuval Steinitz, stated in a press release on Monday that Egypt has to learn from dealing with some neighbouring countries in the gas export fields. He added that Egypt previously regulated gas exports and set the price, and it now has to buy gas from Israel.

"Egypt has to buy natural gas from Israel equalling $7 to $8 per million natural gas units, after it was sold to us," the minister said.

Israel was buying natural gas from Egypt at a price of 70 cents to $1.5 per million thermal units until 2012. However, the production cost stood at $2.65.

In a similar context, the official said that the state will carry the cost of $5bn annually to import a daily amount of 1bn cubic feet of liquefied gas across five years. The gas deficit after importing will reach around 3.55bn cubic feet daily by 2017/2018, according to the Ministry of Petroleum plan. This is in case the two liquefaction plants are operated.

He said that, as per the plan, Egypt's total gas production will reach roughly 4.85bn cubic feet a day by 2017/2018, compared to the current 4.35bn cubic feet.

The current deficit of gas for the local and export markets is at 2.976bn cubic feet daily, despite importing 500m cubic feet.

In case the import deal was agreed upon to import 700m cubic feet of gas from Cyprus by 2017, deficit will reach 2.85bn cubic feet, according to the official.

Unión Fenosa, SEA Gas, and British Gas are the foreign partners for EDCO and Damietta liquefaction plants, and they contracted with the government to pump around 1.88bn cubic feet of gas daily to be exported.

It is said that Unión Fenosa and SEA Gas filed an arbitration suit against Egypt demanding $8bn as compensation for the losses of the Damietta liquefaction plant, due to the halt in gas pumping since July 2012.

The official added that partners in the Damietta liquefaction plant made a condition to provide gas to the plant in return for dropping the suit against Egypt. Unión Fenosa signed a Memorandum of Understanding for importing gas from the Tamar and Leviathan gas fields in Israel to operate its plant, but this is yet to take place.