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Monday, 9 September 2019

Are we inching closer to Israel-Egypt gas exports?

Are we inching closer to seeing Israel beginning to export gas to Egypt? The operator of the East Mediterranean Gas (EMG) subsea pipeline running between Egypt and Israel has signed an agreement to use a terminal owned by Israel’s Europe Asia Pipeline Company (EAPC) to export natural gas to Egypt, Reuters reports. According to the terms of the agreement, gas from the Leviathan and Tamar fields will pass through the state-run EAPC’s terminal in Ashkelon before being transported through EMG’s Ashkelon-El Arish pipeline. EMG will operate and maintain the terminal, and will pay EAPC an undisclosed amount based on the amount of gas supplied.

Delays remain, but this is one hurdle removed: This arrangement removes one of the remaining barriers to the Delek-led consortium supplying natural gas to Egypt under the landmark USD 15 bn agreement signed last year. The gas export arrangement has faced repeated delays and could face more hurdles, including the USD 1 bn lawsuit brought forward by Thailand’s PTT Energy, which goes to trial tomorrow. A new lawsuit could be a “headache” for the exports, as Egypt had previously made clearing a similar arbitration suit a condition for the signing of the agreement. Trial shipments were originally supposed to come in March, with commercial sales beginning by the end of June, but capacity restrictions of Israel’s domestic pipeline network and the now-resolved terminal issue have forced delays.

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