Last Updated: Thu Apr 14, 2011 16:50 pm (KSA) 13:50 pm (GMT)

Egypt to revise gas deals, including with Israel

A gas deal between Egypt and Israel has always been viewed with contention but its future is now up in the air. (File photo)
A gas deal between Egypt and Israel has always been viewed with contention but its future is now up in the air. (File photo)

Prime Minister Essam Sharraf of Egypt has requested the revision of all export gas contracts, including those with Israel and Jordan, reports the Egyptian official news agency MENA.

MENA quoted Mr. Sharraf’s spokesman Ahmed el-Samman as saying that the revision was aimed at bringing the most returns for Egypt and estimated that the boost could be between $3 billion to $4 billion.

While Mr. Sharraf is set to meet Jordanian energy minister Khaled Tuqan today to discuss the deal, MENA did not say if a similar meeting is expected with Israel.

Egypt began supplying an estimated 40 percent of Israel’s gas needs under former president Hosni Mubarak’s rule; Jordan generates 80 percent of its daily electricity needs from Egypt.

Under a 2005 deal, the Cairo-based East Mediterranean Gas Company agreed to sell 1.7 billion cubic meters of natural gas to the Israeli company at a price reportedly set at $1.50 per million British thermal units (BTU).

However, the Egyptian constitution forbids the export of mineral and non-mineral resources without the consent of the People’s Council—and critics of the Israel deal argue that consent was never sought and the deal was shrouded in secrecy.

Opposition groups filed a suit in November 2010 challenging the deal. They said that Egypt sold gas to Israel at very low prices and under a 15-year fixed price deal between a private Egyptian company, partly owned by the government, and the state-run Israel Electric Corporation.

Dr. Ramadan Abu al-Ila’, a professor of petroleum at Suez Canal University, and one of the complainants of the legal suit, told Al Arabiya that Egypt incurs around $1.5 billion in losses daily from this deal.

He also said Russia has offered to buy one million BTUs of Egypt’s natural gas for $13.6, while Israel procures it at 70 cents.

Ibrahim Yousri, a former Egyptian diplomat and also a complainant in the lawsuit, was quoted in The Miami Herald as saying: “It's not a matter of reviewing, it’s a matter of deciding. Reviewing the contracts is something that's been told to us by [former oil minister] Sameh Fahmy hundreds of times and then they end up adding just two or three cents” to the export price.

According to classified information revealed by the Kuwaiti newspaper al-Jareeda, the 2005 gas deal was signed without any government approval and was secret in nature because it allegedly involved both of former President Hosni Mubarak’s two sons who are believed to have reaped large sums of commissions.

The paper also reported that Mr. Fahmy was also involved in the deal deemed illegal and is also alleged to have received large amounts of commissions.

All four men are current under investigation by the Egyptian authorities.

(Dina Al Shibeeb of Al Arabiya can be reached at: dina.ibrahim@mbc.net)

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