Tuesday, 4 October 2011

Egypt's redrafting gas deal with Israel

According to Egypt's Petroleum Minister Abdullah Ghorab Egypt will soon finish drawing up a new gas exports contract for its neighbour Israel, under which Egypt will demand a considerable increase in prices.

Over the last couple of months, gas supplies to Israel have been disrupted by a series of attacks, by militants who opposed the sale of Egyptian gas to its neighbour, on the pipeline in the Sinai border region.

The attacks on the pipeline have become more frequent since the ousting of former president Hosni Mubarak back in February. Egypt's interim government, the Special Council of the Armed Forces (SCAF), has sought to appease the nation by renegotiating the terms of the deal with Israel.

Ghorab was cited by Al Ahram newspaper as saying: "The final draft related to amending the prices for exporting natural gas to Israel will be completed soon. It will see a big increase in the price." He said gas supplies to Israel were still suspended after the latest attack on the pipeline in late September.

At the same time, Egypt is also seeking to renegotiate prices of gas exports to Jordan, which have also been disrupted by the attacks. The minister also added that Egypt's proven natural gas reserves stood at 77.5 trillion cubic feet, which shows little change from the 77.2 trillion cubic feet given by the government in June 2009.

It is thought that Ghorab will present a paper to Egypt's supreme energy council proposing to cut energy subsidies for industries, which accounted for more than a quarter of total spending in Egypt's 2010/11 budget.

Ghorab also said: "In the coming few days I will present a project to the supreme energy council to change the prices as it is not reasonable to subsidise energy for industries that are making huge profits selling their products.”

Sources: Bloomberg, Reuters, AFP

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

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