Even though East Mediterranean Gas Company (EMG) said last week that natural gas deliveries to Israel should resume by the end of May, that is unlikely to happen. Egyptian daily "Al Masry al-Youm" reported yesterday that deep differences remained between Israel and Egypt over Egypt's demand to adjust the price of the natural gas sharply upwards.
Egyptian Minister of Petroleum Abdallah Ghorab told "Al Masry al-Youm" that EMG has voiced reservations over price increases, while Israel completely rejects the suggestion. Formal negotiations are due to start within days.
Ghorab added that the ministry handles the negotiations from a purely economic perspective, focusing on securing the highest profit possible for Egypt, regardless of political considerations. He credited the Egyptian people for convincing the company to review the price before 2013, the earliest date allowed for a review as dictated by the deal signed between Egypt and Israel in 2009.
The paper quotes a senior EMG official as saying that the Israeli side is sticking to the 2013 deadline because it knows that the current deal has a higher value than that of other export contracts signed by the Egyptian government.
Last week, EMG shareholder Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) announced that repairs on the pipeline had been completed, and that technically, it was possible to resume Egyptian gas deliveries to Israel, but that the gas flow would only resume after the Egyptian government improved the security of natural gas facilities in Sinai, and that deliveries were expected to resume by the end of the month.
EMG, the company responsible for Egypt's natural gas deliveries to Israel, built a pipeline from El Arish in Sinai to Ashkelon at a cost of $460 million. Deliveries began in 2008. In 2010, EMG supplied 40% of Israel's natural gas needs, with Yam Tethys, owned by Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG), supplying the rest.
Published by Globes [online], Israel business news - www.globes-online.com - on May 23, 2011
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