Prime Minister Ariel Sharon decided last night, unsurprisingly, in favor of buying natural gas from Egypt, and not from the gas fields of British Gas and the Plestinian Authority discovered off the Gaza coast. Sharon’s decision went against the position of Minister of Infrastructures Joseph Paritzky, who since becoming minister has favored buying gas from British Gas.
The Israel Electric Corporation (IEC) and Sharon did not accept Paritzky’s argument that gas should not be bought from Egypt because the Egyptian’s had constantly changed their stance on supplying gas over several years, their inconsistency being mainly due to political considerations.
Paritzky also believes that it would be preferable to buy gas from British Gas in order to involve such a huge company in Israel’s gas market. He also believes that buying gas from the Palestinians would help to improve Israel’s relations with them
Sharon made his decision to prefer Egypt, which is represented by the Merhav group (controlled by Joseph Maiman) and its Egyptian partners, conditional on negotiations with the IEC being concluded “within a short time”. Sharon said this after the IEC representatives told him that they preferred the Egyptian option because the negotiations with Maiman had reached a very advanced stage and were expected to conclude by the end of the month. Sharon did not specify what he meant by “a short time”.
Sharon stipulated that if the negotiations did not reach a conclusion within a short time, the parties would convene again to discuss the matter. It is already clear that if this occurs, the gas will be purchased from British Gas.
In the discussion, Sharon reportedly said that he opposed the Palestinian option at this stage, fearing that money obtained by the PA would be used to finance terrorism, even though Paritzky said he had received a commitment from PA Minister of Finance Dr. Salam Fayyad that the money would be kept in a separate account. Fayyad said this would guarantee that the money would not be used for terrorism. Paritzky said he believed this promise.
At the end of the discussion, Paritzky did not conceal his disappointment at Sharon’s decision, saying, “It’s important for Israel to have a second gas supplier. If Egypt fulfills its promise and supplies gas, the door is open, but unfortunately, its record is against it. I hope the IEC knows what it’s talking about this time.”
British Gas said in response, “We’re glad that Sharon has set a one-month period for getting Egypt’s response, after which he will decide about purchasing gas from British Gas.”
The Merhav group expressed satisfaction with the decision. The group expressed confidence that the agreement to be reached in negotiations with the IEC would guarantee the regular supply of the quantities of natural gas required by Israel in the long term, supplemented by local sources.
A public struggle has been waged in recent weeks between the two candidates for the second gas supplier: British Gas and Merhav, controlled by Joseph (Yossi) Maiman. The Yam Thetis Israel-US gas partnership, chosen 30 months ago as the main IEC supplier, was also active in this dispute. The only concern that has already signed an agreement to buy natural gas is the IEC. Under the 30 month-old agreement, Yam Thetis will supply 18 billion cubic meters (bmc) of gas over the next 11 years from its fields off the Ashkelon shore.
British Gas, which is offering gas discovered off the Gaza coast, and the Merhav group, which is offering Egyptian gas (together with its Egyptian partners) are proposing to sign agreements for longer periods than that stipulated in the Yam Thetis agreement several billion dollars worth of gas over the next 20-30 years. The IEC is slated to be the main consumer; other consumers include industrial enterprises and desalination plants.
Yam Thetis claims it has reserves of 41 bmc, British Gas claims 40-50 bmc, and Egypt claims huge reserves of hundreds of bmc. 10 bmc are worth an estimated $1 billion.
Published by Globes [online] - www.globes.co.il - on August 19, 2003