Egypt to Buy Gas from Israel?

Frequent power outages may cause Egypt to buy back natural gas sold to Israel as part of 2005 deal.

Tags: Gas Field
Elad Benari , | updated: 3:07 AM

Israel news photo: Wikimedia Commons

In the wake of reports of a shortage of natural gas in Egypt, a report in the Egyptian daily Al Shaab said that the Egyptian government is seeking to buy back 1.5 billion cubic meters of natural gas that was sold to Israel as part of a deal signed by Egyptian Petroleum and Mineral Resources Minister Sameh Fahmy and Israeli Infrastructure Minister Benjamin Ben Eliezer in July 2005, under US pressure. The price of the gas sold to Israel was significantly lower than the market price. One-third of Israel’s natural gas is in fact provided by Egypt under this deal.

The newspaper quoted anonymous sources who said that internal discussions in Egypt's Ministry of Petroleum and Mineral Resources determined that at least half the natural gas sold to Israel under the deal would have to be repurchased at $14 billion, even though it was sold for $2 billion.

In recent weeks, a heat wave that struck the region has caused frequent power outages and water systems to be shut down in Egypt. According to some officials, these were caused by insufficient natural gas at many power plants. Officials have called on Egyptians to conserve power and refrain from displaying the festive lights customarily used during the Ramadan holiday this year.

Demonstrations have been taking place against the Egyptian government over the frequent power outages. "We are protesting the failed government policy, and the deterioration of the economic situation," said Osama Hussein, spokesman for "the Free Popular Front" in a conversation with The Media Line. "We demand the government stop exporting gas to Israel, and cut all ties with it."

According to a report in the Egyptian independent daily Al-Masri Al-Yom, 200 letters of complaint were received by the newspaper from citizens of 16 different Egyptian provinces. Some of the complaints claimed that power cuts occurred in homes as the daily fast of Ramadan came to an end, while others complained that lowered power currents damaged their electrical appliances.

Demonstrators are demanding immediate imports of natural gas, yet at the same time, Egyptians are infuriated by the report that Egypt would have to pay Israel more money to repurchase goods that originated in Egypt.

In January, officials in Egypt's Petroleum Ministry suggested importing natural gas from Iraq for use in its gas liquefaction facility in Damietta, which would be used to turn the Iraqi natural gas into liquid gas for resale. That suggestion also raised controversy, as opponents of gas exports to Israel suggested that the government cancel the sales rather than importing.

Israel's Ministry of Finance has so far declined to comment on the issue. However, large deposits of natural gas found off Israel's shores recently may make purchasing unnecessary in the future.