Crucial infrastructure deal brings Israel closer to Egypt gas exports
In a move bringing lucrative Israeli gas exports to Egypt significantly closer, Israeli fuel transit company Europe Asia Pipeline Co. (EAPC) and East Mediterranean Gas Company (EMG) reached an agreement enabling the use of EAPC infrastructure to transport gas to Israel’s southern neighbor.
The agreement announced on Sunday will enable EMG to operate EAPC’s coastal terminal in Ashkelon, which is required to flow gas through EMG’s 90 km.-long subsea pipeline joining the Israeli gas network to the Egyptian network near El-Arish.
The infrastructure deal represents a major step toward fulfilling a $15 billion decade-long deal signed in February 2018, which will see Noble Energy and Delek Drilling supply 64 billion cu.m. of natural gas to Egypt’s Dolphinus Holdings from the Tamar and Leviathan gas fields offshore Israel.
Under the agreement, EMG will pay EAPC according to the quantity of natural gas exported through the pipeline, and will operate the terminal for the entire duration of exports to Egypt. The pipeline is expected to carry seven billion cu.m. of natural gas annually once in operation.
“The signing of the agreement today marks the completion of a very significant step for the State of Israel’s energy market, which will enable natural gas to be exported from Israel to Egypt, and strengthen the economic ties between EAPC, the State of Israel and its neighbors in the Mediterranean Basin,” said EAPC chairman Erez Halfon. “This agreement will diversify the company’s commercial activities with international companies and strengthen its position as the energy gateway of Israel.”
Delek Drilling said in July that it had successfully completed testing of the EMG pipeline. The channel and the terminal have not been in operation since 2012, when Egypt ended cut-price exports to Israel after there were supply shortages and repeated terrorist attacks on the pipeline infrastructure.
Last year, Noble Energy, Delek Drilling and Egyptian partner East Gas agreed a $518m. deal to acquire a 39% stake in EMG, which will also enable the firms to operate the long-dormant pipeline.
Initial gas delivery through the EMG pipeline linking the Israeli and Egyptian networks is expected to occur from the already operational Tamar field, located 80 km. off the shore of Haifa.
Once the Leviathan field, situated 130 km. from Haifa, becomes operational by the end of 2019, Noble Energy says it expects to sell at least 9.91 million cu.m. of natural gas per day to contracted customers in Egypt.
The deal to supply Egypt follows a September 2016 agreement worth $10b. between Jordan’s National Electric Power Company Ltd. and the operators of the Leviathan gas field, to supply a gross quantity of 45 billion cu.m. of natural gas to Israel’s eastern neighbors over a 15-year period.
Bini Zomer, Noble Energy’s VP of Regional Affairs, said last week that exports to Jordan are expected to commence on January 1, 2020.