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Israel to supply natural gas to Egypt

According to reports in the Wall Street Journal, the deal, which would involve the supply of eight billion cubic metres of gas per year, comes following the announcement of a deal between Israel and Jordan.

Middle East Monitor has previously reported on the problems facing Egypt's energy sector and the country's inability to meet demands. Importing gas from Israel is a cheaper option for Egypt, which has been overwhelmed by local demand and can't meet foreign export commitments.

"Given the volatile political situation in the region, the very fact that two neighbouring states could enter into this sort of contract is important," said Oded Eran, a former Israeli ambassador to Jordan. He said the gas deal has no direct impact on the US backed peace negotiations.

"The talks have been going on since August and there are a number of options on the table," said an Egyptian official who asked not be named.

A person familiar with the Israeli gas drilling consortium said that an agreement with Egypt is unlikely before the country's presidential elections later this year.

Such an agreement would be a reversal from previous years when Egypt exported gas to Israel. But that deal prompted harsh public criticism in Egypt and was eventually undermined by repeated attacks on the pipeline by militants in the restive Sinai Peninsula.

In Egypt, gas consumption this month will overtake production for the first time in this financial year.

Qatar had previously supplied Egypt with gas during the presidency of Mohamed Morsi however his ousting has led to a deterioration of relations with Cairo. The interim government failed, like its predecessor, in the management of a way to import liquefied natural gas. Therefore there are few options available to Egypt.

Drillers in Israel announced two Mediterranean finds in recent years with some 650 billion cubic metres of gas. Flush with energy reserves that could last for decades, Israel has been considering exports to several countries in the eastern Mediterranean including Cyprus and Turkey.

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