"Jordan still pays less than Israel for Egyptian gas"

The doubling of the price under one contract Jordan has with Egypt is not quite what it seems.

The price for natural gas that Jordan pays Egypt is still less than the price East Mediterranean Gas Company (EMG) pays Egypt for the gas it supplies to Israel, an Israeli source told "Globes". Reports in the Egyptian media say that Jordan agreed to a doubling of the price of gas it buys from Egypt, from $3 per million British Thermal Units (BTU) to $6-7 per million BTU, reflecting the "global market price", according to the Egyptians. The agreement is due to be signed by the end of the month.

However, the new price only applies to some of the gas that Jordan buys from Egypt, according to information given to "Globes".

Jordan has two long-term gas supply contracts with Egypt. The first contract, which covers most of the gas supplies, is at a sharply subsidized price of $1.50 per million BTU. The updated price only applies to the second contact, which is supposed to reflect market prices, but only covers a fairly small amount of gas.

The Israeli source says that when the weighted price that Jordan pays for all the gas it buys from Egypt is taken into account, the price is less than what EMG pays. The numbers published in the Egyptian media are liable to be confusing because they refer to the retail price paid by Jordanian end-consumers, not the wholesale price at which the Egyptian National Gas Company (EGAS) sells the gas.

It is interesting to note in this context that Jordan, like Israel, does not buy gas directly from EGAS under a commercial gas purchase agreement, but from a private company, Al-Sharq Gas Company, which acts as a broker. There have been reports in the past that EMG shareholder Hussain Salem was also a partner in Al-Sharq.

Published by Globes [online], Israel business news - www.globes-online.com - on June 12, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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