Gas brings Israel and Egypt closer than ever

Tamara Nassar Power Suits 24 January 2019

Israeli energy minister Yuval Steinitz and Israel’s ambassador to Egypt David Govrin at the Eastern Mediterranean Gas Forum in Cairo. (via Twitter) 

The alliance between Israel and Egypt is now stronger than ever.

Egyptian ruler Abdulfattah al-Sisi acknowledged recently that the two countries have been cooperating to an unprecedented level on security in the Sinai peninsula. Following that admission, Israel and Egypt have reached a deal on their most significant economic cooperation to date.

Israel is taking part in preparations for establishing the Eastern Mediterranean Gas Forum. That gas market – to be based in Egypt – will include Jordan, Italy, Cyprus, Greece and the Palestinian Authority.

The forum aims to “create a regional gas market that serves the interests of its members by ensuring supply and demand, optimizing resource development, rationalizing the cost of infrastructure, offering competitive prices and improving trade relations,” Egypt’s petroleum ministry stated, according to Reuters.

In February 2018, Israel and Egypt signed a $15 billion gas deal for Israeli company Delek Drilling to supply Egypt with natural gas over a 10-year period.

Once implemented, the deal would reverse the previous situation. Until a few years ago, Egypt supplied Israel with natural gas.

Last year, Israeli, Egyptian and American companies together bought a 39 percent stake in the Egyptian company Eastern Mediterranean Gas, which owns the pipeline that will be used to transfer the natural gas as it runs between Israel and Egypt.

The firms involved in the project are Delek Drilling, the US giant Noble Energy and the Egyptian East Gas Company.

Israeli minister visits Cairo

Israeli energy minister Yuval Steinitz visited Cairo earlier this month at the invitation of the Egyptian government.

“Israel exporting natural gas to the Arab world and also to Europe – this is something that sounded like a dream or a fantasy just 10 or 15 years ago,” Steinitz told Reuters.

This tweet shows Steinitz at the forum and visiting tourist sites in Egypt during his trip. It was posted by an Arabic-language Twitter account, run by Israel’s embassy in Egypt:

“This is the first official visit and invitation from the Egyptian government to an Israeli minister since the 2011 revolution … and so this marks the development of relations between Israel and Egypt,” Steinitz said in a video posted by the same Twitter account.

“I think this is the most significant economic cooperation between Egypt and Israel since the signing of the peace treaty 40 years ago,” Steinitz told the Associated Press.

Steinitz is referring to the 1979 peace treaty between Egypt and Israel.

Egypt’s Sinai Peninsula was occupied by Israel in 1967 but Israel later withdrew under the terms of the peace treaty.

Israel also captured the West Bank and Gaza Strip and the Syrian Golan Heights during the 1967 war and occupies them to this day.

Jordan’s gas deal

Apart from Egypt, Jordan is the only Arab country to have formal diplomatic relations with Israel.

The so-called Wadi Araba agreement signed in 1994 normalized relations between the two countries, despite there being no restoration of Palestinian rights or an end to Israeli military occupation of the West Bank, including East Jerusalem, and the Gaza Strip.

Jordan announced in October that it will not renew annexes in the peace treaty that gave Israel continued control of the Jordanian territories of al-Baqoura and al-Ghamr.

Al-Baqoura, an area in northwest Jordan where the Yarmouk and Jordan rivers meet, and al-Ghamr, an area south of the Dead Sea, were leased to Israel for 25 years, but Jordan halted the renewal of the lease.

Despite the Arab states’ official diplomacy with Israel, the peace treaties remain deeply unpopular among the public in Egypt and Jordan.

Jordan’s national electricity company NEPCO has signed a $15-billion agreement to buy natural gas from Israel over a 15-year period.

The pipeline expected to start delivering gas from Israel to Jordan in 2020 has mostly been built, according to the UK publication The New Arab, despite strong internal opposition from the Jordanian public and parliament.

The 65-kilometer route stretches from Jordan’s northern borders with Israel to the Mafraq governorate in the northeast.

The Israeli government is set to make more than $8 billion from the deal, according to campaigners.

Middleman registered in Cayman Islands

The gas will be extracted from the Israeli-controlled Leviathan fields in the eastern Mediterranean.

The partners and benefactors of the Leviathan fields are Noble Energy, Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration. The latter two are also Israeli companies.

Israel will not sell the gas directly to Jordan, but rather through a company called NBL Jordan Marketing.

Jordan Marketing – registered in the Cayman Islands – is wholly owned by Noble Energy.

Jordan Marketing signed an export agreement with NEPCO in 2016 to supply it with natural gas over a 15-year period or until the total amount supplied is 45 billion cubic meters, according to Delek.

Jordan does not need to export natural gas from Israel as it could generate vast amounts of renewable energy locally.

“A company that can guarantee the purchase of all its electricity products and ensure their sale to distribution companies, is a company that can guarantee profit for companies on both sides of the equation,” Mohammad al-Abed, an expert on renewable energy, told the Jordanian TV channel Roya News.

“The pocket of the [Jordanian] citizen is the losing common denominator in this equation.”

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Tamara Nassar

Tamara Nassar is an assistant editor at The Electronic Intifada.