Israeli natural gas companies re-launched talks this week with Egyptian private-sector companies with a view to exporting natural gas to the Egyptian market, according to the Bloomberg news agency. “Israeli gas will be delivered to Egypt through a pipeline in Jordan run by the Egyptian company Fajr, instead of the pipeline going through Sinai,” anonymous Israeli sources told Bloomberg. However, sources close to Israeli gas importers told Al-Ahram Weekly that importing Israeli gas to Egypt via Jordan was “very expensive for importers because it will mean constructing a pipeline from Israel through Jordan at a high cost, while a pipeline already exists between Egypt and Israel.” The Sinai pipeline was used for Egyptian gas exports to Israel for several years before the 25 January Revolution. According to sources, the latest requirements set out by the Egyptian government for companies importing Israeli gas “stipulate that deals with Israel can only be made once arbitration cases against Egyptian companies are resolved.” At the end of 2015, the International Chamber of Commerce (ICC) in Geneva ruled that the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Company (EGPC) needed to pay $288 million in compensation to East Mediterranean Gas (EMG), the company that owns and operates the Sinai pipeline, and $1.7 billion to the Israel Electric Corporation after Cairo halted gas exports to Israel in April 2012. The sources added that if private-sector companies began importing Israeli gas to Egypt via Jordan, “this would not resolve the arbitration cases, which may cause the Egyptian government to block the delivery of Israeli gas.” Bloomberg stated that Israel's Delek Group and Houston-based Noble Energy, the major stakeholders in the country's Leviathan gas field, are in talks to sell about three billion cubic metres of gas a year to Egypt's Dolphinus Holdings, according to Dolphinus's co-founder, businessman Alaa Arafa. In a telephone interview, Arafa told Bloomberg that “the Mediterranean has great potential to become the hub for natural gas in the region, and we want to partner with Israel on this.” The news agency added that companies operating in the Israeli Leviathan field were eager to reach an agreement with Egypt because it had cost around $3.75 billion to develop the field. Leviathan companies signed a $10 billion contract with the Jordan Electric Power Company in September, and Israel is already exporting gas from the Tamar field to Jordan. An EGAS source who spoke on condition of anonymity said legislation regulating the natural gas market would allow private-sector companies in Egypt to import natural and liquid gas from any country and “not just Israel” in future. The source said that the law stipulated the creation of an agency to regulate the gas market, “which will be created by mid-2018.” The first licences to import natural gas will be issued to private companies next year, the source said. The Israeli Haaretz newspaper also reported that after years of uncertainty, Egypt may be on the way to becoming a major market for Israeli natural gas exports after President Abdel-Fattah Al-Sisi signed legislation to create a regulatory body that allows private-sector companies to import gas. Last week, Al-Sisi authorised legislation regulating the gas market and creating an agency to oversee transactions in order to ensure the availability of gas network facilities. The legislation also aims to guarantee quality services and protect the interests of players and consumers. The European Bank for Reconstruction and Development (EBRD) is to give Egypt a grant to prepare a study on creating a gas regulatory body similar to the National Telecoms Regulatory Authority. The grant will be given to consultancy firms, and another grant will go towards preparing an energy strategy for Egypt until 2035. Five private companies have asked EGAS for licences to import natural gas. The British gas consortium BG Group has signed a letter of intent with partners in the Leviathan field to negotiate a deal exporting gas to the BG Group's Idku Liquified Natural Gas (LNG) plant in Egypt. Israel is expected to export seven billion cubic metres of gas, worth $30 billion, annually for 15 years via an underwater pipeline. Dolphinus Holdings also announced it had signed a letter of intent to pump gas to Egypt via an existing pipeline at sea in volumes of four billion cubic metres a year for 10 to 15 years. Israeli partners in the Leviathan field agreed on a plan to begin production at the end of 2019, with an output of around 12 billion cubic metres annually in the first phase at a cost of between $3.5 and $4 billion. In May 2015, Spain's Union Fenosa Gas Company signed a letter of intent with Noble Energy, which owns 36 per cent of Israel's Tamar field, to export 2.5 trillion cubic feet of gas over 15 years to an LNG plant in Damietta in north-eastern Egypt.
