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Sunday, 25 February 2018

Egypt might sign export agreement for East Med gas to Europe as early as mid-2018

Egypt might sign an export agreement to ship East Med gas to Europe as early as mid-2018: Egypt will sign a memorandum of understanding with the EU to export gas from the East Mediterranean through its liquefaction plants before mid-2018, said Oil Minister Tarek El Molla at the International Petroleum Week conference in London on Thursday, according to a ministry statement.

Egypt is also closing in on an import agreement with Cyprus and Greece: El Molla said a preliminary agreement to import gas from Cyprus had been reached. Last week, Cypriot Energy Minister Georgios Lakkotrypis said that “Cyprus is close to selling natural gas to Egypt’s liquefied natural gas plants, and we could reach an agreement in the coming weeks.” El Molla also noted that Egypt and Greece are in talks to establish a framework for further energy cooperation.

PM Ismail sees last week’s USD 15 bn gas import agreement as part of int’l arbitration compromise: Prime Minister Sherif Ismail appears to see that the agreement signed last week, which would see Alaa Arafa-led Dolphinus Holding import USD 15 bn-worth of gas from Israel’s Delek and Noble, as part of a compromise to withdraw the USD 1.76 bn international arbitration ruling against EGAS, EGPC and East Mediterranean Gas (EMG). “We reached an agreement to receive part of the gas in Egypt via its pipelines and this is part of the resolution to the arbitration,” Ismail told reporters on Thursday, according to Bloomberg. He said an understanding had also been reached with Israeli Electric Company, but declined to give more details. The agreement would also help resolve the USD 1.03 bn arbitration ruling awarded by a Cairo arbitration court to EMG, he added, AMAY reports. “The goal is not the import of gas from Israel. We opened up the Egyptian market. We are strongly seeking to receive Cypriot gas, too,” Ismail also said.

Private-sector solution to arbitration hurdle? This comes as sources close to the agreement told Mada Masr on Friday that Delek and Noble Energy have begun talks with shareholders of EMG to acquire the company. The sources added that the pipeline, which had been used to export has to Israel, would be reversed if the transaction goes through.

Last week’s agreement also opens the door to resolving a USD 270 mn arbitration case with Spanish Egyptian Gas Company (SEGAS), which runs the Damietta liquefaction plant and is 80% owned by Spain’s Union Fenosa, the anonymous sources said. While the status of the case is unclear, High Council for International Arbitration commissioner Judge Moustafa El Bahabety had told Enterprise in 2016 that the case would be resolved soon. Union Fenosa Gas had filed a complaint with the ICC in 2013 alleging that “its state partner had failed to comply with contracts by halting gas supplies in 2012 and not making payments.” The company itself had been pushing to import gas from Israel over the years.

The source also added that last week’s agreement to import 64 bn cubic meters of gas from Israel was only one third of the total amount of gas Egypt plans to import from Israel.

Turkey continues to bully Cyprus, shooting itself in the foot and winning Cyprus support from the US and EU in the process: Now that Egypt, Israel, Cyprus and Greece have finally gotten the ball rolling on gas exports, Turkey is resorting to even more outlandish gunboat diplomacy. Cyprus accused Turkey on Friday for a second time of threatening to use force against a drillship chartered by Eni, according to Reuters. Turkey has vowed to prevent Greek Cypriots from exploring for oil or gas around the ethnically-split island. Ankara’s flexing of muscles led the US and the EU to signal support for Cyprus. The US supports the right of Cyprus to explore for natural gas and develop its resources in its Exclusive Economic Zone, a US State Department spokesperson told Ahval. At the same time, the EU threatened to cancel a summit with Turkish potentate Erdogan next month as a result of the aggression. “These actions contradict Turkey’s commitment to good neighborly relations,” EU President Donald Tusk told reporters in Brussels on Friday, according to Bloomberg.

Egypt’s potential to become the region’s energy hub continues to capture the imagination of the international press. The Financial Times’ Ed Crooks suggests that Egypt is well on its way to being a regional gas hub after the signing of the agreement, which he paints as being as significant as the Camp David Accords.

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