Tuesday, 2 July 2019

Israel’s export of gas into Egypt said to be delayed due to hang up in regulatory clearances

Israeli gas exports to Egypt delayed on regulatory hangups? The operators of Israel’s largest gas fields, branded as the Tamar Gas Consortium, have postponed commercial sales of Leviathan gas field-produced natural gas to Egypt to the end of the year, Delek Drilling said in an Israeli bourse filing picked up by Egypt’s local press and Israel’s Algemeiner Journal. Delek, a member of the consortium, blamed an unexpected surge in domestic demand, but anonymous sources told Israeli newspapers that the real culprit is a hold up in obtaining approvals from Israel’s Energy Ministry.

Israel’s competition watchdog also needs to sign off on an agreement related to the pipeline which will be used to transport the gas, the sources said. The consortium, however, expects Israeli Energy Minister Yuval Steinitz to step in and support clearance. It is unclear whether the agreement pending approval is the USD 518 mn sale of a 39% stake in Ashkelon-Arish pipeline operator Eastern Mediterranean Gas (EMG) to Delek, Noble, and Egypt’s East Gas late September. The pipeline was used in the pre-2011 revolution era to transport gas into Israel, but is now being made ready to flow in the opposite direction. Delek said in yesterday’s statements that tests on switching the flow direction were successful.

Background: Delek and its US-based partner Noble Energy partnered together last year with other Israeli energy companies to form the Tamar Gas Consortium. The consortium then signed a USD 15 bn agreement to supply Alaa Arafa-led Dolphinus Holding with gas from each of the Leviathan and Tamar gas fields. Commercial sales of the gas should have begun by the end of June, according to a target Delek announced last month.

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