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Last update - 03:07 10/06/2008 Egypt wants more money for gas By Avi Bar-Eli Tags: natural gas, israel, egypt  A years-old agreement between Egypt to sell natural gas to Israel may take new form, and mainly a more expensive price, after dramatic but secret talks between the two countries. Egypt may be willing to supply more gas to its natural-resource-poor neighbor, possibly at the price of reopening the original agreement. Spurred by opposition anger over Egypt's supply of natural gas to Israel, and mainly its low price, the Egyptian petroleum minister, Sameh Fahmy, vowed to "review prices of natural gas in all agreements without any exception". Fahmy's words at a parliamentary session in Cairo on the pact with Israel triggered shock waves throughout Israel's energy sector. His words on Sunday also raised concerns about the agreement's reliability, and about Egypt's supply of gas to the Israel Electric Corporation via Egyptian-Israeli consortium EMG. Advertisement In 2001, EMG won a contract to supply gas to the IEC at the attractive price of $2.75 per million BTU. The agreement was based on EMG's license from Egypt to sell 7 billion cubic meters of gas for 20 years. But the final agreement between EMG and the IEC was only signed in 2005, after Jerusalem and Cairo signed an "umbrella agreement" to guarantee supply. EMG agreed to supply the IEC with 1.7 BCM of gas for 15 years, for about $2.5 billion. The price reflected the price at which EMG won the tender in 2001. In 2006, EMG began laying an underwater pipeline from El Arish to Ashkelon, at a cost of about $470 million. The pipeline was finished in late 2007 and supply began on May 1. In January, British Gas ceased negotiations to sell "Gaza Marine" gas to Israel. The National Infrastructures Ministry then made a strategic decision to step up gas purchasing from Egypt to meet immediate- and medium-term demand. In March, TheMarker revealed that the EMG pipeline doesn't have the capacity to handle the anticipated increase in demand for gas. In recent months, Infrastructures director-general Hezi Kugler has been meeting with top people at Egyptian government gas company E-Gas to discuss the possibility of increasing supply through a second pipeline to be built, and at a higher price. The agreement with the IEC could also be amended. There is a precedent: Egypt reopened its gas-supply deals with France and Spain, agreeing to sell them more for a higher price. An IEC official had been supposed to take part in talks between the Egyptians and Kugler in May, but ultimately declined. No talks have been held since, but the Egyptians have made their stance clear through the media. On May 20, Prime Minister Ahmed Nazif said Egypt might raise the price of gas, and the other day, as said, Fahmy said supply agreements would be revisited. The National Infrastructures Ministry declined to comment on talks between governments, adding only that the ministry would continue to do everything it could to develop Israel's gas market. The IEC said there is no reason why its director-general shouldn't go to Egypt, and noted that it has a 15-year agreement in place, shielded by an umbrella deal between the two countries. "The Corporation is confident that the Egyptians will honor the agreement, as they honor other fuel-related agreements," the IEC said. A source at the National Infrastructures Ministry said the problems in obtaining gas from various sources had been clear all along, and that the notion that power stations could rely solely on natural gas, without having a significant input from coal, was insane, and irresponsible as well. Bookmark to del.icio.us   Marketing ploy Israeli satellite TV has a new star - Mahmoud Ahmadinejad. Through her lens Madonna's next project: documentary about the Israeli-Arab conflict.   1.   Egyptians can inhale their gas with their favorite Fool (Fava) Di 16:00  |  Genuine Tosefta 10/06/08   2.   Greedy Jerks 16:51  |  Gershon Reed 10/06/08   3.   typical Egyptian negotiation 00:46  |  Joel 11/06/08

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