Egypt Spurns Israeli Offer of Gas Supply

Egypt is not interested in importing gas via pipeline from Israel and instead is focusing on a plan to import liquefied natural gas, a top Egyptian state executive said on Wednesday.

Israel’s energy and water minister Silvan Shalom said last week that it could supply Egypt with gas through a pipeline that already links them. To receive LNG shipments, Egypt must rent a floating terminal, which it aims to have in operation by April after issuing a tender earlier this month.

“For importing the LNG we are working with companies, not with countries,” Taher Abdel Rahim, chairman of state-run Egyptian Natural Gas Holding Company (EGAS), told Reuters.

“Companies like BP, Shell, BG — those are the companies working on importing LNG,” he added.

Egypt’s LNG plan is likely to be more costly than pumping gas from Israel due to the cost of the higher prices LNG fetches in the global spot market.

Spot LNG in the east Mediterranean region is currently priced around $12.00 per million British thermal units, and pipeline deliveries from Israel are likely to be cheaper.

The pipeline was originally built to carry Egyptian gas to Israel and Jordan.

In April Egypt terminated a 20-year deal to supply gas to Israel, citing a business dispute. The deal, signed when President Mubarak was in charge, was unpopular with many Egyptians. Repeated acts of sabotage led to a permanent supply shutdown.

Since the deal was first signed, Egypt’s gas output has declined, while large reserves of gas have been discovered off Israel’s Mediterranean coast.

In August, Avner Oil & Gas said the group of energy companies that found the gas was studying options to export it to Egypt as well as to Jordan, the Palestinian Authority and Europe via a pipeline to Turkey.

However, Shalom said that Egypt was “showing interest in buying gas from Israel.

“If they will indeed want gas and [their interest] is real, then I don’t see any reason why not,” he told Israel’s Army Radio.

On the other hand, EGAS’s Abdel Rahim said, “There is no negotiation, no communication, nothing at all between us and them.”

He added, “What we are working on now is to get the FSRU,” which is a floating terminal used to import LNG.

This article appeared in print on page 7 of the October 28th, 2013 edition of Hamodia.