The owners of an Israeli offshore gas field said they are in the process of signing a 15-year deal to export 4.5 billion cubic metres of gas to a Spanish-owned liquefaction facility in Egypt.
The company which owns the right of exploration at Israel's Tamar natural gas field signed a memorandum of understanding to sell natural gas to the Spanish company Unión Fenosa which together with the Italian company INI owns the gas liquefaction plant at Dumyat.
Israel's economic newspaper Calcalist described the deal that was signed on Monday as the first contract to sell Israeli gas to Egypt noting that a similar contract was signed several months ago with the Jordanian Potash company.
The newspaper said the understanding paves the way for an official contract between the two sides within six months, allowing Israel to supply Egypt with 4.5 billion cubic metres of natural gas annually for a period of 15 years. This amounts to nearly one fifth of the Israeli field's production. It is estimated that the value of the contract is $20 billion; an average of about $1.3 billion per annum.
The American company Noble Energy, which owns 36 per cent of the Israeli field, said that both sides hope to sign a binding deal within six months. Yet, this would require the approval of the relevant authorities in both Egypt and Israel.
A source close to the Israeli partners said that once a final deal is concluded the gas will be transported via a new pipeline that will have to be constructed on the seabed.
Engineer Sherif Ismail, the Egyptian minister of petroleum, said the government has not yet permitted the import of gas from Israel and that it has not granted any local or foreign company operating inside Egypt a licence to import Israeli gas. He stressed that Egypt is a sovereign state and that it will not allow the entry of imported gas to its territories without governmental approval.
Unión Fenosa together with the Italian INI have an 80 per cent shareholding in the Dumyat Gas Liquefaction Plant. The remaining 20 per cent is shared equally by the Egyptian General Petroleum Authority and the Egyptian Natural Gas Holding Company (EGAS).