Israeli Gas Exports to Egypt Advance After Terminal Deal Signed

But two NGOs file suit to block deal that would allow exports to start

File photo: The Tamar Lease natural gas rig, located 90 kilometers west of the city of Haifa, northern Israel.
AP

The Egyptian pipeline operator East Mediterranean Gas has signed a an agreement to use a terminal belonging to Israel’s Europe Asia Pipeline Company for exports of Israeli natural gas to Egypt, the companies said on Sunday.

The pipeline arrangement is one of the final hurdles before Israel could begin selling gas to Egypt in a landmark deal to exports 564 billion cubic meters of gas worth $15 billion.

The gas, produced from Israel’s Leviathan and Tamar fields in the eastern Mediterranean, will be delivered via EMG’s underwater pipeline connecting the Israeli coastal city of Ashkelon and El-Arish in Egypt’s Sinai peninsula. To do that, however, the gas must pass through state-run EAPC’s terminal in Ashkelon.

The EMG pipeline was originally designed to export Egyptian gas to Israel, but was subject to repeated terror attacks and finally shut down in 2012 after Cairo rescinded the export deal. The EAPC terminal has also not been in use since then either, but the state-owned company took care to keep it maintained and ready for use.

In order to move ahead with plans to deal a reverse deal and export Israeli gas to Egypt, Israel’s Drilling and Texas-based Noble Energy, the partners in the Tamar and Leviathan fields, agreed to buy a 39% stake in EMG, along with an Egyptian government-owned company. They also acquired 10-year operating rights, with an option to extend them another 10 years.

Completion of that deal has been delayed, mostly recently from a deadline of the end of August. Sources now say that it should be wound up by the end of September.

Meanwhile, however, another potential obstacle emerged on Sunday after two non-government organizations filed a suit in the Jerusalem District Competition Court seeking to block the EMG acquisition altogether.

In a suit filed by Lobby 99 and Hatzlacha, paid for by crowdfunding, they claim that Antitrust Commissioner Michal Halperin acted incorrectly when she gave her conditional approval to the deal last month. Lobby 99 claimed in its suit that the acquisition violates the law. Both said the conditions Halperin attached to her approval were insufficient. The suit claims that the EMG deals gives control over the single pipeline that could be used in the future to renew imports of Egyptian gas to Israel and create more competition for natural gas in the Israeli domestic market. In contrast to 2012 when Egypt was facing a gas shortage, it has discovered new offshore fields and expects to become a major producer capable of exporting again.

Likewise, the two lawsuits contend, buying the ENG stake will give Noble and Delek, which control the lion’s share of Israel natural gas production, control over the single export pipeline.