The failure of the electricity supply system in Egypt due to lack of Natural Gas is shameful. Egypt since the late nineties became one of the major producer of Natural Gas in Africa and Middle East. The Egyptian Government have been criticized for such performance that many describes as dwindling, if not has failed and lost direction.
“Due to major recent discoveries, natural gas is likely to be the primary growth engine of Egypt’s energy sector for the foreseeable future. Egypt’s natural gas sector is expanding rapidly with production having nearly tripled between 1998 and 2008. In 2008, Egypt produced roughly 1.9 trillion cubic feet (Tcf) and consumed 1.1 Tcf.” reported the USEIA site.
On the other hand, it was reported in June 2010 on the Bloomberg Businessweek site that Israel is on the path to exporting energy for the first time in its 62-year and the offshore discoveries in Israel may hold 16 trillion cubic feet of gas. It also reported that Israel has the potential to become a key regional gas player, competing with the likes of Egypt,”
Egypt has been exporting natural gas to Israel indirectly in a deal least described as a shoddy deal. “The deal was signed in 2005 at a price that was significantly lower than the market price. One-third of Israel’s natural gas is in fact provided by Egypt under that deal.” Reported the IsraelNationalNews web site. The same site reported that the deal was signed as a result of massive political pressure from US.
The Green Prophet blog reported, that the Egypt based East Mediterranean Gas Company (EMG) which exports natural gas from Egypt to Israel has been granted a 20 year tax exemption by the Israeli government. The same site reported that Israel may deny Turkey exports of Natural Gas due to the recent tension.
The Egyptian-Israeli consortium Egyptian Mediterranean Gas (EMG) had reached a deal to export natural gas to Israel in June 2005. The deal entailed the supply of Israel with 1.7 billion cubic meters a year for 15 years at a price of $1.5 per million British thermal units (BTU), which critics said was well below international market prices.
EMG holds an exclusive right to export natural gas from Egypt to Israel, which is building a $469 million gas pipeline from El-Arish in northeastern Egypt to Ashkelon in Israel. EMG signed an accord to purchase 677 MMcfd of gas for 15 years from Egyptian General Petroleum Corp. and state-owned Egyptian Natural Gas Holding Co.
“The single largest owner in EMG is Egyptian businessman Hussain Salem with 28%, followed by the Thai energy giant PTT with 25% and Israeli businessman Yossi Melman controls 20% through Ampal-American Israel Corporation”.
The aforementioned reports demonstrate that:
- Egypt is not supplying Israel with Natural Gas.
- Egypt does not grant preferential pricing on its Natural Gas.
- Egypt supplies EMG Natural Gas at preferential pricing system.
- EMG is the sole supplier of Natural Egyptian Gas to Israel.
From above some questions has to impose themselves:
- Did the US really pressurize Egypt to sign the concession to EMG?, and why?
- Why does Egypt sell to EMG at such low price?
- If the Egyptian Gas is likely to be the primary growth engine of Egypt, why was it sold so cheap ignoring opportunity costs?
- Was Israel importing the gas to re-export it to another countries?, and If that is the case,
- Why Egypt did not export the gas directly to those countries instead of Israel?
- Who gave EMG such concession for supply and does such concession requires the approval of the Egyptian Parliament as a Public Private Partnership deal?
- Why EMG is the sole supplier of Gas?.
- Who gave the land (servitude) right to EMG to build the pipeline, and was it built under a PPP agreement by which the line is to revert to Egypt afterwards.
- The allocation to EMG was based on supply surplus in Egyptian Gas, was there an under estimate of the growth in demand in Egypt? Who is responsible for such miss-estimation?
- If the EMG-Egypt deal is signed under the Egyptian law, why can it be deferred or the least renegotiated for market related pricing?
- What is the impact of the new discoveries of Israel of the gas deal? Shall Israel use that gas and exports its own due to its cheap prices?!!!
All these questions are not yet to be answered by a government that is unpliable to the criticism of its opposition, citizens and ,
The critical mind of
NED
Reference:
http://www.greenprophet.com/2010/08/egypt-tax-israel-natural-gas/
