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Egypt reaps benefits of gas intifada - Daily News Egypt

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Egypt reaps benefits of gas intifada

Agence France-Presse CAIRO: Egypt has unexpectedly reaped huge economic and strategic benefits as a result of an acrimonious battle between Israel, the Palestinians and British Gas over the Gaza Strip s new-found energy bonanza. After years of secretive horse-trading, Egypt is set to pip Israel at the post to buy gas recently discovered off the …


Agence France-Presse

CAIRO: Egypt has unexpectedly reaped huge economic and strategic benefits as a result of an acrimonious battle between Israel, the Palestinians and British Gas over the Gaza Strip s new-found energy bonanza. After years of secretive horse-trading, Egypt is set to pip Israel at the post to buy gas recently discovered off the shores of the troubled Gaza Strip, now under Palestinian control after the Israeli withdrawal last year. The Palestinians have some gas resources we are interested in having, and they need money, so we are also working on this project with them, Oil Minister Sameh Fahmi told AFP. It s a very important issue. The turnaround came last week when British Gas (BG) broke off protracted talks for the sale of Gaza natural gas to Israel, sparking an outcry there over the billions of dollars the lost contract could cost the state. The British giant, who operates Gaza s offshore fields, said it would instead sell to Egypt, which wins on all fronts by consolidating its rank of sixth gas exporter in the world and will become Israel s sole gas provider. Gas is expected to bring a major windfall by 2010 to the embattled Palestinian Authority, which has been desperately seeking cash since the international community protested Hamas rise to power this year by freezing aid. The gas field was discovered in 1999 by BG and its partner, the Athens-based Consolidated Contractors Company (CCC) of Palestinian magnate Said Khoury. Total reserves are estimated at around 40 billion cubic meters (1.4 trillion cubic feet). Gaza s gas will eventually go to Egypt, where it will be super cooled into liquefied natural gas at Idku plant in the northern Nile Delta, and exported, BG Egypt chief Oscar Prieto told AFP. Officially, such contracts are not decided at the political echelon but the strategic implications are huge. Last year, Israel agreed to buy Egyptian gas in a memorandum of understanding signed last year by Fahmi himself and Israeli Infrastructure Minister Binyamin Ben Eliezer, after years of tortuous negotiations disrupted by the Palestinian uprising. The $2.5 billion deal provides for 1.7 billion cubic meters (59 billion cubic feet) of gas annually over 15 years to be sold by Israeli-Egyptian consortium East Mediterranean Gas to the Israeli Electric Company (IEC). The gas is to be transported through a pipeline under the Mediterranean. The pipeline will be completed by the end of 2007, Fahmi said. Following the unexpected discovery of rich natural gas fields off the Gaza coast, BG and the Palestinian Authority launched parallel talks with the aim of supplying Israel. But then Israeli premier Ariel Sharon, banking only on Egyptian gas, slapped a veto on the deal, arguing that the Palestinians would use the receipts to finance terror. Private Israeli operators considered close to current Prime Minister Ehud Olmert, but refusing to rely on IEC, had then sought direct deals with EMG at the same price of $2.75 per million BTU (British thermal units). When the negotiations failed, Israel made an about-face and resumed efforts to clinch a deal with BG for Palestinian gas. Making business with them was impossible; Israel simply wasn t ready to pay the market price. Economically and technically, its offer was not mature and what s more politically tricky, Prieto told AFP in an interview. British Gas, an international heavyweight with a strong presence in Egypt, secured a 20-year concession over Gaza Maritime in a 90-10 partnership with CCC. CCC and the Palestinian Authority have an option to increase their share to 40 percent. It s a sensitive issue; we will still be working on technical problems the next few months and we need to let the dust settle, Prieto said.

Topics: FJP

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https://dailyfeed.dailynewsegypt.com/2006/05/27/egypt-reaps-benefits-of-gas-intifada/
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