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Monday, 18 December 2017

Government to honor historical gas export contracts

The Sisi administration plans to honor all export contracts Egypt signed before the nation became a net importer of gas back in 2012, said Oil Minister Tarek El Molla, Al Shorouk reports. The statement appears to signal that the government plans to use influx of gas from Zohr, which it hopes will help Egypt become a net gas exporter in 2018, to resolve outstanding contracts which has caused legal headaches for the government. Most significant of these is a ruling by a Swiss court which fined Egypt USD 2 bn in compensation to Israel Electric Corporation (IEC) for halting gas supplies to our eastern neighbor in 2012. The case had led to the government suspending any plans to importing gas from Israel as part of a region-wide collaboration to export gas from the East Mediterranean to Europe. Egypt and Israel have reportedly been holding talks behind closed doors to revive cooperation efforts.

Meanwhile, output from the Zohr gas field will raise Egypt’s natural gas production rate to 5.5 bcf/d from 5.1 bcf/d, Oil Minister Tarek El Molla told Reuters. Zohr will add 350 mcf/d of natural gas, with output increasing to around 1 bcf/d by mid-2018, he had said. Separately, Saudi Aramco has supplied 1 mn bbl of crude to Egyptian refineries, El Molla also said. “Egypt and Saudi Arabia will be studying the economic feasibility of continuing to refine Saudi crude in Egyptian refineries by the start of 2018 … Saudi Arabia agreed in April last year to provide Egypt with 700,000 tonnes of refined oil products a month for five years,” Reuters notes.

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