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Egyptian Gas: Facts and Theories

(Jerusalem Post) Zvi Mazel - Both Egypt and Israel tend to play down the impact of the cancellation of the sale of Egyptian gas to Israel. However, the cancellation marks a further deterioration of relations between the two countries. Israel was counting on the natural gas from the offshore fields of Port Said, which involved relatively low infrastructure costs, to produce cheaper and cleaner electricity, and had eyed Egyptian gas since the mid-1990s. At the time, Qatar had declared its willingness to sell gas to Israel, but Jerusalem had preferred to buy gas from Egypt in order to further strengthen the links between the two countries. Lengthy negotiations ended in a memorandum of understanding signed on June 30, 2005. Article II of that memorandum is explicit: "The government of the Arab Republic of Egypt guarantees the continuous and uninterrupted supply of the natural gas contracted...for the initial 15 years as well as for any extended period." Yet after repeated sabotage of the pipeline, Egypt supplied less than 20% of the contracted gas in 2011 and even less in the first quarter of 2012. The loss to the economy of Israel was estimated at 1.5% of its GNP, according to the Israel Finance Ministry, due to the need to turn to more expensive (and more polluting) energy sources. Not only will the Egyptian move further frighten foreign investors, but Egypt is likely to incur heavy penalties for the unilateral cancellation of the contract. The writer is a former Israeli ambassador to Egypt.
2012-05-07 00:00:00
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