The crystal chandeliers hanging in the Cairo offices of Egyptian-Israeli partnership Eastern Mediterranean Gas & Oil (EMG) witnessed a particularly tense meeting two years ago. At one side of the table sat Egyptian businessman Hussein Salem and former Egyptian gas company chair Mohamed Tawila, who was recruited to head EMG's negotiating team. At the other end sat then-Israel Electric Corp. chair Jacob Razon, IEC senior VP Joseph Dvir, IEC gas project manager Shimshon Brokman, legal adviser Renelle Joffe and officials from the national infrastructure and foreign ministries.

"These were tough and topsy-turvy negotiations," Brokman told TheMarker, regarding EMG's first deal. "It was a meeting of cultures, suspicions and emotions. It wasn't easy for Salem to sit across from Joffe, who fired a volley of criticisms. The guy [Salem] lost his head. It's fortunate there was a big table between them." The talks led to one of the biggest and most important deals for tycoon Yosef Maiman, the Israeli partner in EMG. Maiman, an old hat at giant international deals, sensed a decade ago the raw potential of gas deals, and of connecting Israel to the gas fields off the Egyptian coast. Natural gas is cleaner than oil, cheaper and more accessible in the Eastern Mediterranean basin. It's an ideal solution for local power plants.

The deal has fetched Maiman hundreds of millions of dollars, but he's not alone. Tethys Sea group owner Yitzhak Tshuva and British Gas are also involved in exploration. Thus, three consortia, all headquartered in Herzliya Pituah, are competing over Israel's main future source of energy, and they will determine the economy's future as well, to some degree.

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Maiman, a native of Peru, was an anonymous businessman when opportunity knocked in the form of the Oslo era. He had established his company Merhav in 1976, and in the 1980s he tried his luck helping South American banana republics restructure their debts for a fat fee. However, after a decade of this work, the national debt business began to wane with the entry of groups such as the London Club - private creditors - and the Paris Club - public lenders. Maiman, who felt he was being undercut, quickly made an about-face and became a project developer, but not just for any project. He wanted to take on enormous projects bordering on the fantastical, with equally dreamy potential.

The first signs of peace made Maiman contemplate how he could translate this new spirit into a high-risk project with a potentially huge return. It was a natural job for his right-hand man, Nimrod Novik, a former Middle East envoy for then-prime minister Shimon Peres.

Novik searched for a dominant Egyptian businessman who had the support of his government and could set up joint projects with Israeli entrepreneurs, and soon found Salem. Acquaintences of Salem say he is both an international tycoon and an Egyptian who hasn't forgotten his roots. "King of salination" and "prince of hoteliers" are just two nicknames Salem has received, and he is known for his government connections, in particular President Hosni Mubarak. He represented the government in business deals in the 1970s and entered private business in the 1980s, maintaining his insider connections. Regional peace conferences were held in his Sharm el-Sheikh hotels. The future EMG partnership was born at Salem's Cairo home in the wake of the Oslo accords, and this vision has become a lucrative reality in the past year.

Merhav representatives gave Salem several project proposals, from an Egyptian-Israeli gas pipeline to a fuel refinery in Egypt. The Egyptians soon ruled out a binational gas partnership, but approved the refinery project. Egypt doesn't lack gas, and tons pass through the Suez Canal every day. However, its refineries were inefficient and outdated. Moreover, Egypt lacked sufficient access to external financing sources.

And this is where Merhav entered the picture. Bolstered by its ties with European financiers, it easily leveraged its political connections to obtain backing for the local authority. Thus was built the $1.3 billion Middle East Refinery (MIDOR) west of Alexandria, of which Salem owned 70 percent, Merhav 20 percent and the Egyptian Natural Gas Company (EGAS) 10 percent. Opened in 1999, the plant refines 5 million tons of oil annually.

In 2000, Merhav sold its stake to a group of Egyptian bankers. Maiman applied this business model - financing, planning, building projects in high-risk areas, and turning a quick profit - to other regions as well, including South America, East Europe and Central Asia.

After the election of Prime Minister Ehud Barak in 1999, Maiman exploited the atmosphere of renewed optimism to ask his Egyptian neighbors about the natural gas project again. This time, they said yes.

The Egyptian government licensed EMG, founded in 2000, to export gas to the eastern Mediterranean basin and beyond. The company is owned by Salem (65 percent), Merhav (25 percent) and EGAS (10 percent). It is essentially a middle man between Egyptian's huge natural gas resources and foreign markets, including Israel. It was licensed to market 15 billion cubic meters (BCM) of natural gas annually over 20 years, with an option for another 20 years. It operates in a free-trade zone, so its Israeli partners are careful to conduct their business abroad to preserve the company's tax-exempt status.

The IEC, Israel's largest natural gas consumer, published a tender in 2001 to buy 2.5 BCM annually for 15 years. EMG competed against the Tethys Sea and BG consortia, winning with a bid of $2.75 per million BTU. Tethys didn't take the loss well, and launched a campaign to convince the government to buy from its reserves off the Ashkelon coast. This induced the government to pressure the IEC to find a way to buy Israeli gas. Tethys eventually dropped its prices to those of EMG, and the IEC signed it to supply 1.8 BCM per year for 15 years.

The deal with EMG, however, stalled when the sides began discussing implementation. Some sources familiar with the talks claim the state didn't want to get involved in a take-or-pay contract as long as there was uncertainty regarding the time frame for setting up the natural gas distribution system and the guarantees the state was asked to provide. Many others attribute the breakdown to the outbreak of the second intifada and the deteriorating security situation. They claim the Egyptians got cold feet, as they did in the mid-1990s during initial talks on such a deal.

In August 2003, then-prime minister Ariel Sharon came to Maiman's rescue when he decided to intervene in the stalled talks. Salem arrived a few days later heading an Egyptian delegation, and talks with the IEC renewed.

During this round of talks, the new national infrastructures minister, Yosef Paritzky, demanded the IEC-EMG deal be backed politically by both governments. Because there never had been a binational agreement since the two countries had signed a peace treaty, EMG officials interpreted Paritzky's demand as an excuse to bring in BG. Maiman hired a private investigator to check out such suspicions. While he found no evidence of bribery by BG, he did uncover Paritzky's plot to frame his political rival in Shinui, Avraham Poraz. That case led to the minister's resignation.

Despite Paritzky's departure, Israel and Egypt decided to back the deal and signed such an agreement in 2005, a week before EMG and the IEC closed their $2.5 billion contract.

During the gas talks, Maiman got involved in an even riskier venture: Channel 10. The channel lost $2 million within two weeks of its launch in January 2002. Maiman's partners slowly abandoned the channel, leaving Maiman to handle the mounting losses alone. He had to absorb a $120 million blow, until tycoons Ron Lauder and Arnon Milchin bailed him out. However, gas profits began to make up for the failed media investment.

He bought a 51-percent share of investment firm Ampal in 2001 for $90 million. He later enlarged his stake to 62 percent and floated the company on the TASE. A year ago, Merhav sold half its EMG holdings to Ampal for $258 million. Maiman's natural gas vision, which had remained stuck on paper, now became a lucrative business.

He sold off another 4.4 percent stake for $100 million to a group of institutional investors, and farmed off a further 4.4 percent to form a new joint venture, Merhav-Ampal Energy Holdings, with the institutional investors. Together, his natural gas project has fetched him nearly $360 million in the past year. Salem recently joined him in the selloff, dumping 12 percent of EMG for $260 million.

Over the past year, EMG has signed $5 billion in gas supply contracts with Israeli clients, starting with a $420 million pipeline. Yet the bottom line is that all the deals depend on supplying gas the EMG doesn't own, for power plants that haven't been built yet, and may not be completed in the next three years. EMG hasn't received any income from these companies, including the IEC.

Still, EMG generated $620 million for its partners before supplying even one cubic meter of gas in a pipeline not yet laid down. This is all based on one contract signed with the IEC, on the eve of the electricity sector reform. The big money is perhaps buried deep in the ground, but with a little creativity, daring and financial ingenuity, Maiman proved you can extract it, even if the gas stays in place.