Israel Looks at Azerbaijan Option as Egypt 'Reviews' Gas Exports

As Egyptian officials said that a gas export deal with Israel will be "reviewed," Israel revealed that energy talks are underway with Azerbaijan.

Nissan Ratzlav-Katz ,

A gas pipeline in Azerbaijan
A gas pipeline in Azerbaijan
photo: file

Under pressure from internal opposition groups, Egyptian officials said this week that all natural gas export deals will be reconsidered, including those signed with Israel. Meanwhile, an Israeli minister revealed that initial talks are underway with Azerbaijani officials for a long-term gas import agreement worth billions of dollars.
Egypt opened the taps for the first time on an undersea pipeline from El-Arish in Egypt to the Israeli city of Ashkelon earlier this year.

During a parliamentary session in Egypt focusing on Egypt's natural gas agreement with Israel, Egyptian Petroleum Minister Sameh Fahmy said on Sunday, "We will review prices of natural gas in all agreements without any exception." The same day, an Egyptian Petroleum Ministry official told a parliamentary committee that Egypt would not be signing any new contracts for natural gas for several years, "until world prices stabilize."

The Egyptian gas export policy has drawn sharp criticism from domestic opposition factions in recent months. The terms of Egyptian energy contracts are kept confidential, but the opposition claims that the prices agreed upon are well below market rates.

Without revealing the content of the agreements, Egyptian government officials confirmed that existing natural gas contracts with France and Spain have already been renegotiated, and that Egypt is currently in the midst of such contract renegotiation with Israel. A 2005 agreement between Israel and Egypt stipulates that the Arab state will sell 1.7 billion cubic meters of natural gas to Israel each year for a period of 15 years. This would meet most of Israel's current gas needs, which amount to over two billion cubic meters annually.

Egypt opened the taps for the first time on an undersea pipeline from El-Arish in Egypt to the Israeli city of Ashkelon earlier this year. A sensitive energy facility is located in Ashkelon, which has been the target of ongoing Palestinian Authority Katyusha and Kassam rocket attacks.

The Azerbaijan Option
Alongside its agreement with Egypt, Israel is also exploring other options to meet its energy needs. In an interview with the Azerbaijani news agency Trend last week, Israeli Infrastructure Minister Binyamin Ben-Eliezer said that Israel is in talks with Baku over a potential agreement that could be worth USD $40 billion in Azerbaijani gas exports.

"We have been buying gas from Egypt, but are doing exploration work in Israel and holding negotiations with our partners. Azerbaijan occupies a special place among the producer partners," Ben-Eliezer said.

The minister also addressed a possible arrangement in which Israel would serve as a conduit for Azerbaijani oil to markets in East Asia. "Azerbaijani oil would be unloaded by tanker in Asheklon and transported onwards to Eilat... for further delivery to the East Asia region," Ben-Eliezer explained.

Ben-Eliezer visited Baku last week to participate at the 15th Caspian Oil and Gas Exhibition. At the time, he also met with Azerbaijan President Ilham Aliyev, Minister of Industry and Energy Natig Aliyev and the President of the State Oil Company of Azerbaijan, Rovnag Abdullayev.  

The oil- and natural-gas-rich Muslim state of Azerbaijan became independent in 1991, after the fall of the Soviet Union. It has had diplomatic, trade and security relations with Israel ever since.