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Despite owning vast offshore reserves, Egypt is to import gas from Israel

Energy and Water Resources Minister of Israel Yuval Steinitz
Israel's Minister of National Infrastructure, Energy and Water Resources, Yuval Steinitz [File photo]

Israel’s Minister of Energy has announced that his country will start to export gas to Egypt “within a few months,” Al-Khaleej Online has reported. Yuval Steinitz said that Israel’s gas exports to its neighbour are expected to reach seven billion cubic metres annually over a period of ten years.

The agreement to import gas from Israel is controversial among Egyptians, not least because their country has been producing natural gas from its own offshore field since 2015. Egypt’s Zohr is the largest gas field in the Mediterranean Sea and one of the most prominent discoveries of natural gas in recent years worldwide. It contains gas reserves estimated at 30 trillion cubic metres. Indeed, Egypt used to sell gas to Israel — albeit below market rates — but the agreement collapsed in 2012 after repeated attacks on the pipeline in the Sinai Peninsula.

Speaking on the sidelines of a regional natural gas forum in Cairo, however, Steinitz added that it is expected that about half of the gas exported to Egypt will be used in the domestic market, with the rest being liquefied for re-export. He also pointed out that Israel and Egypt have discussed ways to extend mutual cooperation in the natural gas industry, including exports.

READ: Israel will begin exporting gas to Egypt in a few months’ time

Steinitz is the first Israeli energy minister to visit Egypt since the January 2011 revolution. “Exporting Israeli natural gas to the Arab world, as well as Europe, would have just been a dream 10 or 15 years ago,” he noted.

Gas exports from Israel to Egypt will come under a landmark $15 billion agreement announced in February last year. In September, Israeli and Egyptian companies bought a 39 per cent stake in the Eastern Mediterranean pipeline to pave the way for such a deal.

Stakeholders in the offshore gas fields, Tamar and Lothian, have stated that they will supply the Egyptian private sector company Dolphin Holdings with about 64 billion cubic metres of gas for ten years as part of the deal.

The Egyptian parliament paved the way for this huge gas deal with Israel by approving a bill submitted by Abdel Fattah Al-Sisi’s government in July, 2017. This bill allows private sector companies to import and trade natural gas in the domestic market.

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