Israel-Egypt gas exporter says turmoil won’t damp sales outlook

Yosef Maiman, part owner of the Egyptian-Israeli natural-gas pipeline, said turmoil in the Middle East won’t stop the joint venture’s fuel sales from more than doubling to $1 billion by 2014.

Egyptian gas exports to Israel were halted Feb. 6 after an explosion damaged the 100-kilometer (62-mile) pipeline’s metering station in the Sinai desert. East Mediterranean Gas Co., which operates the pipeline, is partly owned by Ampal- American Israel Corp. Maiman, Ampal’s chairman and chief executive officer, controls 20.6 percent of East Mediterranean Gas through Ampal and his closely held Merhav Group.

Ampal has dropped 13 percent this year on concern that the current government upheaval in the Middle East will hurt Israeli companies.

East Mediterranean Gas will hold a trial run of the pipeline March 3 and is set to resume gas exports by March 4, Maiman said. He expects the pipeline to expand capacity in the next three years to 7 billion cubic meters from about 2.5 billion cubic meters in 2010.

Forecast Unchanged
The numbers match previous forecasts that sales would climb to $1 billion in 2014 from $400 million last year. Maiman said he doesn’t expect the forecast to change as a result of the recent unrest in Egypt.

“Security has been beefed up in the area following what the government believes can only have been a terrorist attack on the site,” Maiman said. “We are confident that we will be able to honor all our supply commitments, as we always have. This is not only in Israel’s interest but also in Egypt’s economic interest.”

Maiman, an Israeli citizen born in Germany and raised in Peru, said that “fringe” opposition leaders in Egypt have recently tried to make “unfair claims” that Egypt is selling gas to Israel at 75 cents per million British thermal unit. “That is in fact four times lower than what we pay,” he said.

Gas Imports
About 16 percent of the electricity produced by Israel Electric Corp., the country’s power monopoly, is derived from gas imported from Egypt, the company’s spokeswoman said. About 40 percent of Israel gas consumption comes from Egypt, which is delivered entirely by East Mediterranean Gas.

Israel’s only domestic gas source is the Yam Tethys project, which operates at the Mary-B and Noa fields off the coast of Ashkelon.

Egypt has natural-gas reserves of 77 trillion cubic feet (2.18 trillion cubic meters) and is the main producer of the hydrocarbon in the eastern Mediterranean, according to the U.S. Energy Department. The country exported 650 billion cubic feet of gas in 2009, 30 percent either to Jordan, Syria and Lebanon through the Arab pipeline, or to Israel through the El-Arish- Ashkelon line, according to the U.S. department’s figures.

Egypt supplies Israel with gas under a 15-year contract. Israel imports about 85 percent of its energy.

(Source: bloomberg)


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