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Thursday, 19 May 2016

Israel could agree to half of USD 1.73 bn fine levied on Egypt so gas talks can resume, Leviathan back on the table

Israel may agree to settle for half of the USD 1.73 bn fine Egypt was ordered to pay it so talks can resume on exporting Israeli offshore gas there, two people familiar with the negotiations told Bloomberg. A settlement would tear down one of the roadblocks to a multi-bn USD natural gas agreement that Egypt and other countries in the region have painted as imperative until newly discovered fields like Zohr are developed. The export agreement would also firmly establish Egypt as a regional gas export and (potentially) petrochemicals hub. Negotiations are still underway, with authorities in both countries still expected to approve the final figure; one source suggests the payments would be spread-out over 14 years. Egypt in December froze negotiations between Egyptian and Israeli companies when an international arbitration court ordered it to pay Israel damages for violating a contract to supply Israel Electric with Egyptian gas.

Meanwhile, Israel has struck a new deal with Texas-based Noble Energy and Israel’s Delek Group to allow them to begin developing the Leviathan field after a Supreme Court blocked a previous agreement in March, Israel’s Finance Minister Yuval Steinitz said on Wednesday, according to Reuters. The agreement will be brought to the government for final approval in the coming days and gives the state more leeway to change policies if needed, said Steinitz.

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