Egyptian Gas Deal a Strategic Asset

Besides the economic benefits of the recently concluded natural gas deals with Egypt and Jordan, the national security will also benefit, according to an Israeli think-tank report.

“The natural gas deal signed recently has great strategic value for Israel. In the new reality created, any damage by Hezbollah or Hamas to Israel’s ability to produce gas will also affect the supply of electricity to Jordan, Egypt and the Palestinian Authority,” Institute for National Security Studies (INSS) researchers Dr. Oded Eran, Ofir Winter, and Elai Rettig were quoted by Globes from a study published this week.

This interest “will become an important component in the intelligence and security cooperation with neighboring countries in identifying and preventing sabotage, and a catalyst for them to seek calm if fighting breaks out with one of these organizations,” they wrote.

In February, Tamar and Leviathan gas field owners signed a contract for exporting 64 BCM of natural gas to Egypt for $15 billion over 10 years.

“Presumably, the government of Israel played an important role in securing this deal, by promoting it with the Egyptian government and possibly also by covering the guarantees required from Dolphinus for its approval,” the INSS team said.

Eran told Globes that he believed the deal “could improve the balance of power in the Middle East and stability with Lebanon and the Palestinian Authority, and ease the Iranian threat.”

While acknowledging some disgruntlement in Egypt from Islamist groups over the deal, since Israel would profit, but the governments in Cairo and Yerushalayim saw overriding advantages:

“First, Egypt seeks to settle the $1.76 billion in compensation that the Egyptian gas companies were required to pay the Israel Electric Corporation (IEC) as part of an international arbitration verdict in 2015.

“Second, the decision to allocate most of the gas in the Zohr field to Egyptian domestic consumption paves the way for the flow of gas from Israel, Cyprus, and other countries to the liquefaction facilities in Damietta and Idku for the purpose of export to Europe… The third consideration is the promise of estimated revenues of some $22 billion over 10 years.”

The deal still cannot be hailed as a breakthrough in Israel-Egypt relations, the researchers say. There has been economic cooperation in the past, as well, but the Egyptian masses and extremist elements remain hostile to any dealings with Israel.