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Last update - 02:27 03/09/2008 Jerusalem concerned as Egypt halts gas supply to Israel By Avi Bar-Eli Tags: gas, Egypt, Israel The supply of natural gas from Egypt to Israel was halted on Friday and has yet to be resumed. Concern is mounting in Jerusalem: Sources there believe Egypt is struggling to supply all its clients, and has chosen to cut back its supply for its neighbors, including Israel, some of which pay especially low prices for the fuel. Israel receives Egyptian gas through Egyptian-Israeli consortium EMG. The Israel Electric Corporation, which is the main consumer of the Egyptian gas, has resorted to buying larger amounts from the Tethys Sea group through spot deals that are significantly more expensive. The outcome could well be higher electricity bills for Israel's consumers as the IEC rolls over the higher cost onto them. Advertisement In 2001, EMG won a tender issued by the IEC to supply gas at an attractive price of $2.75 per million BTU (British thermal units). The commercial contract with the IEC was signed in 2005, after the governments in Cairo and Jerusalem signed an umbrella agreement guaranteeing the supply of gas. The contract locks in a 15-year supply of gas, at a pace of 1.7 billion cubic meters (BCM) a year, with the options of increasing the supply by 25% and extending the deal by five years. In 2006 EMG began laying down a 100-kilometer undersea pipeline to bring the gas from El-Arish in Egypt to Ashkelon, at a cost of $470 million. The works ended in 2007 and gas began to flow on May 1, 2008. But the pipeline's operation has been anything but smooth, sometimes halting because of problems with the quality of the gas. Also, only about a third of the promised amount has been forthcoming. Meanwhile, opposition has been rising in Egypt, partially against the sale of gas to Israel, but mainly against the relatively low price set in the contract. Officials from both countries have held a series of dramatic, top-secret meetings regarding the volume of supply and change to the contract signed between EMG and the IEC. Egyptian sources strongly implied that they want to reopen the deal. Talks have broken down since then. EMG has frozen talks to sell Egyptian gas to other Israeli consumers, until the relations between the two countries clear up. However, EMG did place a bid in another IEC tender, for the supply of 5 BCM more. Sources in Israel's energy market say that Egypt simply doesn't have the production capacity to supply its own consumption of gas and its contractual obligations to clients. That is why Cairo has had to decide on cutbacks in the gas it supplies - and it decided to start with the countries to which it supplies gas at subsidized prices - Jordan and Syria, or at a discount - Israel. Meanwhile, in any case, voices of opposition to the deal with Israel have been growing stronger. Foreign news agencies have been reporting that a Cairo court will be discussing a petition by opposition politicians in Egypt, challenging the legality of the agreement between Israel and Egypt. "The commercial agreement between the Israel Electric Corporation and EMG rests on the agreement between the two nations to supply gas to consumers in Israel," the IEC stated. "We are handling the day-to-day issues, while the government is handling the strategic issues. Based on the information we have at hand, we believe that the gas supply problems will be resolved shortly." The National Infrastructures Ministry commented that it was aware of the technical difficulties in supplying gas from Egypt to Israel, but stressed that it has faith in the agreement between the two countries. "We have no doubt that Egypt will stand by the agreement it signed with the government in Israel, including the commercial agreement signed between EMG and Israeli customers. The ministry is in constant contact with government officials in Cairo and in parallel is making great effort to assure additional sources of gas, including Russia and Azerbaijan," the ministry stated. Bookmark to del.icio.us   Interfaith grandchildren A new group is helping U.S. seniors teach their interfaith grandkids Jewish traditions. Iranian war games Iran army to hold three-day drill amid speculation over Israeli strike.   1.   Gaza is not a issue 03:27  |  Victor 03/09/08   2.   Victor, it isn`t 05:01  |  judith 03/09/08   3.   It`s about time.... 06:22  |  mariapalestina 03/09/08   4.   This is business 07:05  |  newsreader 03/09/08   5.   This is business 07:05  |  newsreader 03/09/08   6.   #3 the difference is Israelis actually pay 07:07  |  David G 03/09/08   7.   Do business with Egypt and suffer the consequences 08:04  |  Mike 03/09/08   8.   Israel need to stop trusting their enemies 08:10  |  fred 03/09/08   9.   Judith - This is Business, Not War and Peace 08:18  |  Mark of Lewiston 03/09/08   10.   The day will come ... 09:20  |  Historian 03/09/08   11.   Painful when essential services are cut off, hey, Israel? 09:36  |  Clickfool 03/09/08   12.   Poor frustrated Fred # 8 09:44  |  Clickfool 03/09/08   13.   The extreme economic vulnerability of Israel 09:52  |  Clickfool 03/09/08   14.   #12 gotta laugh at the "our oil" stuff, Clickfool 11:06  |  Johnboy 03/09/08   15.   "only about a third of the promised amount has been forthcoming" 11:58  |  PETER SM 03/09/08   16.   israel thanks clickfool for good wishes 12:03  |  odles 03/09/08   17.   foolish cluck-head 11-13 12:20  |  Miche Norman 03/09/08   18.   Victor / Maria Gaza is the same issue 12:24  |  Miche Norman 03/09/08   19.   For Odles #15 13:00  |  Clickfool 03/09/08   20.   A history lesson for Miche Norman # 16 13:09  |  Clickfool 03/09/08   21.   # 16 miche 13:12  |  Axel 03/09/08   22.   For Miche Norman again # 17 13:19  |  Clickfool 03/09/08   23.   The National Infrastructures Ministry assures us... 13:36  |  S 03/09/08   24.   CFOOL "IEC has resorted to buying larger amounts from the Tethys" 13:37  |  PETER SM 03/09/08   25.   It`s what we get for bying from a nation 13:38  |  David Teich 03/09/08   26.   LOL 13:48  |  Simone 03/09/08   27.   CFOOL"buying larger amounts from the Tethys" Can`t read? 14:09  |  PETER SM 03/09/08   28.   cluckhead has it wrong again 14:14  |  Miche Norman 03/09/08   29.   who needs oil and gas if 14:17  |  wh 03/09/08   30.   The land of milk and honey and a light unto the world 14:17  |  Buick from Boca 03/09/08   31.   Clickfool ,don`t worry about Israel.Be worry about your country 14:20  |  Pavel 03/09/08   32.   More history for cluckhead 14:38  |  Miche Norman 03/09/08   33.   #19 CF - a lesson incomplete 14:45  |  Moshe 03/09/08   34.   #19 CF - a lesson incomplete 15:05  |  Moshe 03/09/08   35.   Cluckhead an expert on war crimes 15:33  |  Miche Norman 03/09/08   36.   For Miche Norman # 28 16:01  |  Clickfool 03/09/08   37.   CFOOL Arabs got 87% of the mandate.There was no Jordan 16:02  |  PETER SM 03/09/08   38.   Miche Norman, on Israel the nice guys # 35 16:15  |  Clickfool 03/09/08   39.   #38 CF 17:26  |  Moshe 03/09/08   40.   Back then Iran was buddy, then Turkey now Egypt 01:24  |  Helm of Chelm 04/09/08   41.   #35 Miche Norman. To add to Clickfool`s request... 03:33  |  Maureen Ann 04/09/08   42.   #28 a bit o` history for Miche 04:30  |  Johnboy 04/09/08   43.   #42 Johnboy 06:23  |  Moshe 04/09/08   44.   Gas 09:43  |  Count Dracula 04/09/08   45.   #43 Moshe, I stand by my comment Part 1 04:41  |  Johnboy 05/09/08   46.   well then just go get it .... 07:16  |  ragged soul 09/09/08   47.   45: JB always stands by his lies (3rd try) 16:33  |  David Teich 09/09/08

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