EMG Says It Is Not Party to Israeli-Egyptian Gas Pact

In strongly worded statement, company that owns pipeline that would deliver the gas denies any involvement in talks.

Off Haifa coast, oil rig at enormous Leviathan natural gas field.
Albatross

East Mediterranean Gas appeared on Monday to throw a wrench into a prospective plan to sell gas from Israel’s Leviathan field to Egypt's Dolphinus Holdings, saying that even though a pipeline it owns in Sinai is supposed to deliver the gas it had not been informed of any agreement.

"EMG is not a party nor has it been informed about the transaction reported by the Leviathan partnership and Dolphinus or any other third party, and has not taken any part in negotiations like these,” the company said in a strongly worded statement.

“To remove any doubt, no conversations have been held between EMG and Dolphinus on an agreement like this and there were no negotiations about it in the past. EMG protests the repeated use of its name without its agreement, apparently in order to serve [the interests of] third parties.”

The statement came five days after the Leviathan partners, which are led by Texas-based Noble Energy and Israel’s Delek Group, said they reached preliminary agreement to supply Egypt’s Dolphinus Holdings, which represents non-governmental users, with up to 4 billion cubic meters of gas a year for 10 to 15 years.

The surprise agreement followed the discovery of massive gas reserves in Egypt in August, which had cast doubt on the ability of the Leviathan partners to export gas to Egypt as they had planned. Prime Minister Benjamin Netanyahu and others see export agreements with Egypt as the foundation for closer regional ties.

But critics said the deal was announced to shore up support for the so-called gas framework the government signed with the energy companies putting into place the last elements of Israel’s energy policy and have cast doubt about how serious the agreements are, especially as the Sinai pipeline runs through an area that still suffers from chronic terrorism.

The agreement envisions Israeli gas being shipped to Egypt over EMG’s Sinai pipeline, which had been designed to deliver Egyptian gas to Israel before a series of terrorist attacks effectively shut it down and Egypt later cancelled the contract.

Noble and Delek also reached a similar understanding in March to export oil from their Tamar field through the EMG pipeline, eliciting a similar protest from the company

Shares of the Israeli Leviathan partners ended lower on Monday, with the Delek units Avner and Delek Drilling both ending 0.5% down at 2.65 shekels (68 cents) and 13.89 shekels, respectively. A third partner, Ratio, fell 1.3% to 31 agorot.

But a source close to the Leviathan partnership said the EMG statement was in fact not from the company itself.

“We’re not talking about an announcement from EMG but from the shareholder Yossi Maiman in the framework of the arbitration he is undergoing with the Egyptian government,” said the source, who asked not to be named.

“Dolphinus has already signed a memorandum of understanding with a majority of EMG shareholders and right now in London a meeting is underway between Dolphinus representatives and the main EMG shareholders,” the source said.

Maiman, who once controlled Ampal-American Israel Corporation, which holds a 12.5% stake in EMG, is seeking compensation from Egypt for cancelling the contract to supply Egyptian gas to Israel.