June 2, 2011 / 7:33 AM / 8 years ago

Firms discuss Egypt gas exports to Israel : minister

CAIRO (Reuters) - Egypt’s oil minister said on Thursday firms involved in exporting Egyptian gas to Israel were discussing resuming supplies, halted by pipeline blasts, and dismissed the idea that politics was hindering agreement.

Workers build a pipeline for transporting natural gas to Israel in north Delta Nile, 300 km (186 miles) north of Cairo, November 23, 2008. REUTERS/Nasser Nuri

Gas supplies to Israel, which gets up to 45 percent of its gas supplies from Egypt, have been halted for more than a month after the blasts on Egypt’s side of the pipeline in the wake of political turmoil after President Hosni Mubarak was ousted.

The exports have long been a contentious issue in Egypt with the media and ordinary Egyptians accusing Mubarak’s government of selling gas too cheaply to Israel. Egypt signed a peace deal with Israel in 1979 but ties have never been very warm.

U.S. investors in the East Mediterranean Gas Co (EMG) have taken legal steps against the Egyptian government to ensure gas flow resumes to Israel, the companies have said.

Speaking on the sidelines of the Gas Exporting Countries Forum (GECF) conference in Cairo, Petroleum Minister Abdullah Ghorab initially said the timetable for resuming supplies to Israel was “under review”.

When he was later asked by reporters when the review would be complete, he said: “This is ongoing. (EMG) and EGAS are talking on this issue every day”, referring to Egypt’s national gas company EGAS.

Asked if there was any politics involved in the issue of exports to Israel, Ghorab said: “No”.

He said the case involved technical issues, adding: “We have to have security for the line. There have been two accidents and we need to secure the line.”

Israel receives natural gas from Egypt under a 20-year deal signed in 2005. Flows have been cut since April 27 when an armed gang attacked a Sinai metering station, owned by Gasco, the Egyptian gas transport company that is an EGAS subsidiary.

ARBITRATION

Ghorab also played down the issue of possible arbitration in the case, saying such action would only be sought if there was no agreement between the companies involved, which was the right of any party to a contract.

“What they (the companies) mentioned, if we don’t agree we will go to arbitration. This the right of everybody. This is the right of everybody in the contract,” the Egyptian minister said.

Ampal American Israel Corp said in a statement it had joined EGI-Fund, PTT International and other international shareholders in EMG in formal steps toward arbitration under a U.S.-Egypt bilateral treaty for investment protection.

Ampal, along with Egyptian businessman Hussain Salem, Egypt Natural Gas Co, Thailand’s PTT, American businessman Sam Zell, chairman of EGI and Israel’s Merhav, own EMG.

Egypt said in April it would review its gas contracts with other states, including Israel and Jordan, amid accusations that Mubarak’s administration had improperly negotiated gas sales.

In an apparent reference to Egypt’s efforts to renegotiate gas terms, Ghorab told delegates at the gas conference he favoured flexible contracts and pricing formulas to allow a “fair and sustainable relationship between sellers and buyers”.

“This was exactly our understanding in Egypt of how this relation should be when we got into a renegotiation process for revising Egyptian export gas prices for our long-time contracts that have been accomplished a long time ago, under completely different world market conditions,” Ghorab said.

He did not name any countries or contracts.

“Mutual understanding and a positive response from all parties (should) help in achieving stable long-term supplies that satisfy the interests of all parties,” he added.

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