Last Updated: Sun Apr 24, 2011 00:59 am (KSA) 21:59 pm (GMT)

Mubarak associates detained over gas deal with Israel

Egypt's former energy minister, Sameh Fahmy, is to stand trial for charges related to a gas deal with Israel. (File Photo)
Egypt's former energy minister, Sameh Fahmy, is to stand trial for charges related to a gas deal with Israel. (File Photo)

Egypt’s former energy minister Sameh Fahmy and six other officials will stand trial on charges related to a natural gas deal with Israel, Reuters reported the country’s public prosecutor as saying.

The prosecutor’s spokesman issued a statement that these officials would be detained and then tried at a criminal court in Cairo.

The spokesman, Adel al-Saeed, also issued a statement that the toppled president Hosni Mubarak was questioned over his country’s gas exports to Israel at a price lower than the market’s.

“Hosni Mubarak would always be completely responsive to what Israel wanted with zero regard for what the man in the street wanted,” Mansour Abdel Wahab Mansour, a Hebrew language professor and political analyst of Arab-Israeli relations at Ain Shams University, told the New York Times.

“That is not going to change 180 degrees, but the new government or the new system will have to give somewhat more consideration to public opinion,” Mr. Mansour said.

Many Egyptians viewed the Egypt-Israel gas deal with mistrust.
Since November last year, opposition groups have filed a suit challenging the deal and said that the gas deal which was under a 15-year fixed price deal was a rip-off for Egypt.

Few details are publicly available concerning the deal that was signed in 2005 between a private Egyptian company, partly owned by the government, and the state-run Israel Electric Corporation.

According to reports, under the 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).

A senior Egyptian official, who spoke on the condition of anonymity told the New York Times that the permission for the sale came from the presidency and the intelligence agency, which had a small stake in the deal along with the government-owned Egyptian Natural Gas Holding Company.

He said ministers outside the petroleum ministry were not consulted, and the government ignored a court order to show publicly that the deal was not diverting gas needed domestically.

“That was a big question mark,” the official said. “We never understood why it was sold—and it would have made sense to allow local companies to buy it. From a national security point of view it did not end up with the most sensible arrangement.”

Other former Egyptian government officials who have also spoken with the New York Times on the condition of anonymity said the price renegotiated around 2008 was raised to about $4 per million BTUs, up from the previous cap of $1.25 per million BTUs. East Mediterranean Gas could then negotiate its own terms with Israeli buyers.

Nikos Tsafos, an analyst at PFC Energy in Washington told the US paper, “there is no global benchmark global price for natural gas.”

But Mr. Tsafos said that in comparable deals in the region, Turkey, Greece and Italy were paying $7 to $10 per million BTUs.

According to classified information revealed by the Kuwaiti newspaper al-Jareeda, the 2005 gas deal involved both of Mubarak’s two sons who are believed to have reaped large commissions.

Israel gets 40 percent of its natural gas from Egypt under an arrangement put in place after the 1979 peace agreement.

The gas deal is also dubbed as illegal since the deal’s contract was signed without any government approval and constitutionally invalid. The Egyptian constitution stipulates that the sales of any mineral and non-mineral resource should have the approval of the people’s council.

According to the paper, a key shareholder in the private company that brokered the deal was the president’s longtime friend, Hussein K. Salem. A senior Egyptian official said the intelligence service also owned a slice of the deal.

Mr. Salem, an intelligence agent turned tycoon fled Egypt after the uprising, and is being sought by prosecutors.

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

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