CAIRO - Egypt is planning to raise the price of its natural gas exports to a minimum $5 per one million British thermal units (BTU) after the January 25 revolution. The move comes as no surprise in the wake of public disapproval about exporting gas to Israel at a low price, ranging from $3 to $4 per one million BTU, according to official reports. But Egyptian Minister of Oil Abdullah Ghorab has made it clear that the plan is to adjust gas pricing pacts with all importing countries and Israel in particular. Egypt exports natural gas to Jordan, Syria, Lebanon and Israel through Sinai-based pipelines and liquefied natural gas (LNG) to France and Spain through its Mediterranean port of Damietta. "The media and public resentment of exporting natural gas to Israel will back Egyptian negotiators in getting the best price," Ghorab said, adding that "gas exports to Israel do not exceed four per cent of Egypt's total output". The country's proven reserves of natural gas are estimated at 77.2 trillion cubic feet (tcf), according to the Ministry of Oil. Egypt exports 215 million cubic feet per day to Israel through the East Mediterranean Gas consortium (EMG), according to the Oil Ministry. The consortium consists of Ampal-American Israel Corp, Thailand's PTT and Israel's Merhav. EMG, owned by Egyptian businessman Hussein Salem, supplies 45 per cent of the gas needed by Israel's electric utility. The rest comes from areas off Israeli shores, according to official data. In December, Israel discovered two gas fields in the eastern Mediterranean that could provide it with all its natural gas needs for decades. Reserves at the gas field of Leviathan, 130 km off the Mediterranean port of Haifa, are estimated at 16 trillion cubic feet. Israel has another gas field in Tamar, the largest gas find in the world in 2009, at 8.4 trillion cubic feet. In 2005, Egypt signed an agreement with Israel to export natural gas piped through Sinai. Three years later, Egyptian gas started to flow to Israel. The two countries signed a peace treaty in 1979, ending decades-long wars since 1948. A one dollar increase in the price of one million BTU exported to Israel will yield $90 million annually. If the price is raised by $1 per one million BTU Egypt may get $800 million a year in revenues, according to official reports. While Gohrab believes that exporting natural gas to Israel is "a political issue", analysts say it is also an economic matter. "Around seven per cent of Egypt's output is for domestic consumption and the remainder used in the manufacturing sector and exported. The Government should focus on labour-intensive industries to reduce unemployment rates," Sherif Shawqi, a researcher at Alexandria University, told the Egyptian Mail. In 2007, the Egyptian Government endorsed a scheme to gradually increase the price of natural gas for non energy-intensive sectors from $1.25 to $2.65 per one million British thermal units (BTU). The Government sells gas to energy-intensive industries at $3 per one million BTU, according to the Industrial Development Authority (IDA). "In the future natural gas will be used in industries like fertilisers, power-generating plants, steel and others. Reviewing the pricing policy is obviously important, but the focus should be on industrialisation," Shawqi explained. "Natural gas reserves should be preserved for future generations. These rich energy resources should drive economic development and growth. Natural gas exports are of secondary importance," he argued. Domestic and industrial energy consumption is expected to rise in the coming decades due to population growth. The population of Egypt, 80 million at present, is forecast to total 99 million in 2025, according to a UN report. By 2050, Egypt's Supreme Council for Urban Planning and Development predicts it to reach 140-155 million. Last July, Egypt signed a $9 billion agreement with BP and Germany's RWE to develop offshore fields to supply up to one billion cubic feet per day of natural gas in 2014.
