Dolphinus reportedly signs USD 15 bn natural gas agreement with Israel
Egypt just became the region’s premier energy hub. Delek Drilling and Noble Energy announced signing two binding agreements to export gas from Israel to Egypt via Dolphinus Holdings, according to Globes. “Egypt is becoming a real gas hub … This [agreement] is the first [transaction] of potentially more to come,” Delek Drilling CEO Yossi Abu told Reuters. Delek and Noble will supply 64 bcm of natural gas from the Tamar and Leviathan gas fields over 10 years under a contract estimated to be worth USD 15 bn.
The agreement still needs regulatory and government approvals in Israel and Egypt. “The supply of the natural gas will begin when the required infrastructure is in place to convey the gas to Egypt and will continue until either 64 bcm is supplied or 2030, whichever is sooner,” Globes notes. The parties are examining the possibility of transporting the gas using the existing EMG pipeline, which previously transported gas in the opposite direction from Egypt to Israel, or to transfer via Jordan. Dolphinus, which is owned in part by industrialist Alaa Arafa, first made news about importing gas from Israel in early 2015 and, rumor has it, had been one of five companies to apply for a gas import permit after the Natural Gas Act was passed last year, effectively deregulating the market and opening it up to private sector players.
In a tweet on Monday, Israeli Prime Minister Benjamin Netanyahu said: “I welcome the historic agreement that was announced on the export of Israeli gas to Egypt. This will put bns into the state treasury to benefit the education, health and social welfare of Israel’s citizens.” Israeli Energy Minister Yuval Steinitz chimed in by saying that “This is the first time since the signing of peace treaties in the Middle East that such significant [agreements] between the countries have been signed,” according to Reuters. “The agreement will strengthen relations between Israel and its neighbors and increase the economic cooperation between them,” Delek’s controlling shareholder Yitzhak Tshuva said.
But what about that USD 1.76 bn arbitration award that PM Sherif Ismail said is blocking imports from Israel? While the Oil Ministry said it had no comment on the agreement, Minister Tarek El Molla phoned-in to several of last night’s talk shows to clarify that imports will not start until the case with Israel is resolved. Prime Minister Sherif Ismail had made it a policy point not to allow imports of gas from Israel until it dropped the USD 1.76 bn international arbitration award in favor of Israeli Electric against EGAS, EGPC and EMG. El Molla said the agreement may even help end the dispute with Israel, describing it is a step forward in the way of Egypt becoming a regional energy hub. (We have more in Last Night’s Talk Shows, above.)
The story has captured the imagination of the international business press and has been picked up by the Financial Times, Wall Street Journal, Reuters, Bloomberg, the Associated Press and RT among others.
Worth reading for context: Reuters’ take in late December on how Egypt was emerging as the clear leader in the race to become a regional energy hub.
RELATED: Did EMG get the largest arbitration award in Cairo arbitration court history? The news of the agreement comes a day after reports of the Cairo Regional Center for International Commercial Arbitration ordering EGAS and EGPC to pay East Mediterranean Gas co-founder Josef Maiman USD 1.03 bn in damages. Our friends at Shahid Law Firm, which represented EMG in the case along with Freshfields, tell us this is the largest award handed down by the arbitrator. Haaretz notes that the decision by the Cairo-based arbitrator came after the UN Commission on International Trade Law ruled that EGAS and EGPC had violated the terms of the Egyptian-Polish trade treaty’s clauses protecting investors. Maiman had filed the case as a Polish citizen.