Egypt denies reports of plans to import Israeli gas

The Egyptian Cabinet released a statement on Wednesday denying reports regarding Egypt’s alleged plans to import natural gas from Israel, and asserting that no agreements have been made with any Egyptian companies to this end, privately owned Al-Masry Al-Youm newspaper reported.

The Cabinet reiterated that neither local nor foreign companies are legally able to make deals to import natural gas from any country without obtaining approval from the Egyptian government.

Regional media picked up on a statement from Texas-based company Noble Gas — operator of Israel’s off-shore natural gas fields — announcing it had signed a non binding letter of intent with Italian-Spanish consortium Union Fenosa to pipe gas to its liquefaction plant on Egypt’s Mediterranean coast.

The original press release made it clear that the agreement was non-binding and depended on regulatory approval from both Israel and Egypt. However, many local news outlets inaccurately reported this as a plan by Egypt to import Israeli gas, amid a crippling energy crisis causing extensive power cuts across the country.  

According to Noble Gas, the company hopes to sign a contract within six months that will last for 15 years, with a gross sales quantity of 2.5 trillion cubic feet of natural gas — an average of 1.1 to 1.3 billion cubic feet per year — worth US$20 billion. However it is unclear whether the gas will remain in Egypt or be processed to other countries.

The Spanish Union Fenosa Gas plant in Damietta has been sitting idle since 2013 due to the Egyptian government diverting gas designated for export to the domestic grid.

The Tamar fields were discovered in 2009, with Noble Energy owning over 36 percent of it, an estimated 10 trillion cubic feet of natural gas.

In 2012, the Egyptian Natural Gas Holding Company terminated a 2005 gas deal to supply Israel with 60 billion cubic feet of natural Egyptian gas at US$1.5 per million thermal units.

The company cited violations of contractual obligations and delays in payment from Israel as the reason for termination, which came amid increasing criticism of supplying gas to Israel at cheaper prices than market rates and the exploitation of the deal by Mubarak regime figures to embezzle money.

The Cairo Criminal Court is currently looking into a case against Mubarak, his sons Alaa and Gamal, as well as former Interior Minister Habib al-Adly and six of his aides on charges of killing protesters and exporting gas to Israel.