Egypt Offers Gas – At Higher Rates

April 23, 2012  

An Egyptian minister on Monday said the Egypt was willing to begin selling gas to Israel again – at more favorable prices to Cairo.

Her remarks came after it was reported late on Sunday night that Egypt planned to unilaterally terminate its 2005 natural gas export contract with Israel.

“From Egypt’s point of view there are no objections to reaching a new agreement with new conditions and a new price,” Minister for International Cooperation Fayza Abul Naga told reporters.

Before cancelling the deal, Egypt tried to renegotiate the deal with a retroactive price hike, but Israel has refused, saying it already pays market rates.

Prime Minister Binyamin Netanyahu said Israel was in no hurry to sign a new deal, noting it had strategic reserves that could be tapped. 

Energy Minister Uzi Landau told reporters, “It’s an unfortunate announcement, but in no way is it a surprise. It sums up a reality that has existed for more than a year.”

“For nearly two years now we have been preparing for a halt in supplies. So, while it causes great discomfort and will bring a rise in energy prices, Israel has been developing its energy market without depending on this gas,” he said.

Gas from Egypt once accounted for about 40 per cent of Israel’s reserves of natural gas, the country’s primary energy source, But pipeline attacks have stopped the flow for most of 2012 – and Landau has actively been looking elsewhere.

Israel’s newly discovered reserves from huge offshore gas fields will secure Israel’s energy needs for decades, even making it an exporter.

The first field – Tamar – will come on line around April 2013. The even larger Leviathan prospect is due to begin production around 2017.

Meanwhile, a senior Egyptian general on Monday sought to end the war of words that erupted between some officials in Cairo and Jerusalem late Sunday.

“We should understand that there is no relation between the Camp David Accords and the gas deal with Israel,” Major General Tariq El-Mahdy told Egypt’s Sada Al-Balad television channel.

El-Mahdy, the former head of Egypt’s Air Defense Forces and current governor of Egypt’s New Valley region, said, “Decisions over war and peace can’t be taken simply — the slogan of Egypt’s army is to be ready for war as if it will happen tomorrow.”

His remarks came after Egyptian Field Marshal Hussein Tantawi said Monday that Egypt will “break the legs” of those who threaten it, al-Ahram reported, in an apparent reference to Israel.

Tantawi, who spoke during a military drill in the Sinai, also said Egypt’s military was ready “to strike at a moment’s notice.”

Earlier on Monday, Knesset opposition leader Shaul Mofaz described Egypt’s decision as a “possible breach of the Camp David accords.”

He also called on the United States, who brokered the 1978 Egypt-Israel Peace Treaty, to immediately “take a clear stand” on the issue.

Meanwhile, Foreign Minister Avigdor Lieberman went as far as to suggest bolstering Israel’s military presence along the Sinai border.

“The Egyptian case is much more worrisome than the Iranian one,” The Hebrew-language Maariv quoted him as saying.

El-Mahdy described Egypt’s decision to scrap the unpopular deal with Israel as “a step on the right track” and “an indication that nothing is impossible.”

He noted the cost of securing the Sinai pipeline that feeds gas to Israel as one of the drawbacks of the deal.

Since the January 25, 2011 uprising that led to former President Hosni Mubarak’s ouster on February 11, 2011, the Sinai gas pipeline feeding Israel and Jordan has been bombed 14 times.

Critics have openly accused Mubarak of selling the gas to Israel at below international prices in what they term a “sweetheart deal.”

However, Israeli officials have repeatedly noted that the price they pay for natural gas is better than other regional exporters receive and is in line with international prices.

Nonetheless, Mubarak is currently on trial, facing charges of conspiring with fugitive businessman Hussein Salem to export gas to Israel at below market prices.

Former minister of petroleum, Sameh Fahmy, as well as other former Egyptian officials are also on trial because of the prices stipulated in the gas deal with Israel.

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