The Israeli economic newspaper Calcalist reported that an agreement changing the price of Egyptian natural gas exports to the Israel Electric Corporation (IEC) came into effect on Tuesday. The IEC also announced that new contracts signed with East Mediterranean Gas (EMG), the Egyptian company exporting natural gas to Israel, are now in force.
The Israeli paper wrote that prices have increased from US$2.75 to around US$4 per British thermal unit (Btu), signifying a 45 percent rise. The new contracts specify that Israel should receive 2.1 million Btu of Egyptian natural gas annually for 20 years. The deal was estimated to be worth US$10 billion.
Calcalist reported that the agreement between EMG and the IEC was criticized severely by Yam Thetis, EMG’s main competitor. Yam Thetis claimed the new agreement violates the principle of equal opportunity.
The crisis was only defused when Yam Thetis signed an agreement with the Israeli government to supply natural gas at an estimated value of US$3 billion.
An informed source at the Egyptian Ministry of Petroleum said that the recent increase in the price of Egyptian natural gas was connected with the trade agreement between EMG and its clients in Israel, most importantly the IEC.
According to the petroleum ministry source, the new prices will be implemented retrospectively to all gas sold after the contract took effect.
The General Petroleum Authority confirmed last month that the petroleum sector had negotiated with EMG to fix gas prices to be in line with changes in the petroleum and gas markets. The petroleum sector succeeded in raising the price of gas to the EMG and added a clause stipulating the review of prices every five years if the price of gas in Israel undergoes a major change.
Egyptian natural gas is exported to Israel according to an agreement signed in 2005. The agreement states that Egypt should export 1.7 billion square meters of natural gas annually to Israel for 20 years.
Translated from the Arabic Edition.