Egyptian Gas Stoppage to Cost Israel $1.5m Per Day
Egyptian gas stoppage will cost Israel an estimated $1.5 million daily, Globes reports.
The shortfall in natural gas is the result of Wednesday morning's bombing of the Israel-Egypt gas pipeline in the Sinai Peninsula. East Mediterranean Gas Company (EMG) shareholder Merhav Group, owned by Yosef Meiman, said gas deliveries to Israel, Jordan, and Egyptian factories were halted as a result of the attack.
To meet demand the Israel Electric Corporation (IEC) (TASE: ELEC.B22) has been forced to purchase gas at higher rates from Israeli billionaire Yitzchak Tshuva's Yam Tethys, and to generate gas using diesel, which accounts for the $1.5m increased daily price tag.
Israel was already facing a hike in gas prices as infrastructure officials for Egypt's new junta sought to retroactively raise the cost Israel has paid for gas under a 2008 contract.
Immediately after the Sinai attack, Israel's Minister of National Infrastructure Uzi Landau convened an emergency meeting to discuss ways to accelerate key initiatives to protect Israel's gas supply and electricity production. Among those initiatives are the construction of new power stations in Israel, and a floating gas terminal to receive gas from the Tamar and Leviathan fields in the Eastern Mediterranean.
Tshuva’s company is also at the heart of the initiatives Landau seeks to accelerate. In 2009, Yam Tethys beat out its main rival, Egyptian-based Mediterranean Gas Company, to supply Israel with natural gas from the Tamar and Leviathan fields.
Tshuva, who owns 53% of Yam Tethys - Noble Energy, Inc. (headquartered in Houston, Texas) owns 47% - won a five-year contract to furnish natural gas to new power plants that IEC is building to meet increased demand for electricity in Israel.
Much of Israel's increased demands are due to a significant increase in the purchase of home central air conditioning systems by Israeli consumers in the summer.
A similar attack on the gas pipeline was foiled only a month ago, when a six-man terrorist squad entered a gas terminal in Sinai, overpowered the guards - and the explosives failed to detonate. An attack on a metering station on the pipeline to Jordan on February 6 resulted in a halt in gas deliveries to Jordan and Israel until March 15.