Egyptian gas supply to Israel almost back to normal

Gas deliveries from Egypt to Israel have reached 90% of volumes prior to the cutoff on February 5 and will continue to ramp up this week, said Israeli energy industry sources.

Supplies resumed on March 15 after the export pipeline, which was damaged by an explosion, was fixed. Shipments also resumed to Jordan.

Meanwhile, Ampal-American Israel Corp, a partner in the East Mediterranean Gas Company — which exports the gas from Egypt to Israel — said in its annual report Friday that the future policy of the Egyptian government may not coincide with that of EMG.

The statement said that there is no certainty that Egypt will meet its commitments regarding the supply of natural gas to Israel in the future.

EMG supplied Israel with 2.1 billion cubic meters of gas in 2010 and its contractual commitments are to increase this to 3 Bcm in 2011. EMG has signed commitments to supply 4.8 Bcm/year of gas starting in 2013.

The Ampal statement follows remarks last week by Egypt’s new oil minister Abdallah Ghorab. He said that his ministry is re-examining the gas agreement with Israel, specifically the price at which gas is sold to Israel and other countries.

Ghorab said the agreements, signed under the auspices of the previous minister Sameh Fahmy, include a mechanism that permits amending the gas supply agreements. The minister said this would not be a complicated process.

Jordan is currently paying around $3/MMBtu while prices to Israel were raised by nearly 50% last year to around $4.50/MMBtu when the long-term supply agreement was renegotiated.

Israeli energy industry analysts have said the price of Egyptian gas sold to Israel could go as high as $6-6.50/MMBtu.

(Source: platts)


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