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Egypt considers gas imports from Israel — minister

By Agencies - Jan 14,2015 - Last updated at Jan 14,2015

CAIRO — Egypt is open to importing gas from Israel, its oil minister said in state-owned media on Wednesday, another sign that it may lean on its neighbour to help tackle its energy troubles.

Egypt is going through its worst energy crisis in decades and is seeking fresh sources of natural gas, which powers most of its homes and factories, including Algeria, Russia and Cyprus.

But importing gas from Israel is more controversial. Popular mistrust of Israel runs high following three wars with Egypt and its continuing occupation of Palestinian land.

Oil Minister Sharif Ismail said gas imports from Israel were a possibility, when asked in an interview by the state-owned Al Mussawar magazine.

"Anything can happen. Whatever achieves the best interests of Egypt, and of the Egyptian economy and the role of Egypt in the region... That will determine the decision to import gas from Israel," he said.

Companies are already negotiating to bring Israeli gas to Egypt, but any deals will hinge on approval from Cairo.

Egypt became the first Arab country to sign a peace treaty with Israel in 1979, following three decades of intermittent conflict since Israel's creation in 1948.

While many Egyptians still view Israel with suspicion, relations have improved since the army toppled President Mohamed Morsi, an Islamist, in 2013 after mass protests against his rule.

The two countries also have a shared interest in containing the Hamas, which controls the Gaza Strip, and maintaining stability in the Sinai Peninsula where security has deteriorated since Morsi's ouster.

Egypt, which once exported gas to Israel and elsewhere, has become a net energy importer over the last few years.

The government has attempted to improve the energy landscape by slashing subsidies, paying down its debt to foreign energy firms, and negotiating import agreements.

The operators of Israel's offshore Tamar gas field said they had plans to build a pipeline to Egypt's liquefied natural gas (LNG) plant in the northeastern port of Damietta, run by a joint venture of Spain's Gas Natural and Italy's Eni .

Israel's Delek Drilling, one of the operating partners, said in November that if an agreement is signed, gas supplies to Egypt could start flowing in 2017.

Separately, Britain launched this week its largest trade mission to Egypt in over a decade, involving more than 40 companies from the top foreign investor in the Arab world's most populous country.

The meeting in a palace-turned-hotel focused on developing the energy, real estate and construction sectors, as well as drumming up foreign involvement in a vaunted expansion of the Suez Canal that aims to create an international commercial hub.

British Middle East Minister Tobias Ellwood said the mission demonstrates London's commitment to boost international investment in Egypt and increase bilateral trade.

"It is part of an ongoing programme of economic cooperation which will include more trade visits and UK participation in the March investment conference," he said, speaking alongside Egyptian Prime Minister Ibrahim Mahlab and referring to a larger international trade meeting planned for the spring.

Political unrest since the 2011 ouster of longtime autocrat Hosni Mubarak has battered the Egyptian economy, leaving the vital tourism industry in tatters and Cairo struggling to attract foreign investors.

Egypt has grown to rely on massive influxes of aid from Gulf nations such as Saudi Arabia, Kuwait and the United Arab Emirates to keep its economy afloat and buttress the state budget, which is deep in deficit.

The government is reforming investment laws in an attempt to improve transparency and slash Egypt's notorious red tape.

Several areas attract foreign investors, said Angus Blair, chairman of Mideast business consultancy Signet. He added that overcoming bureaucracy and boosting the visibility of projects in urban centres would help surmount hurdles.

"A number of sectors are interesting, first of all construction and infrastructure projects," as well as power, water, retailing and financial services, he indicated. "One of the key elements of change obviously are the developments around the Suez Canal."

The government says the $8.5 billion "mega-project”, based on digging additional waterways for the Suez Canal, could boost revenues from the route connecting the Red Sea to the Mediterranean to $13 billion annually from its current $5 billion.

States and institutions, Britain included, are encouraging Egypt to press ahead with its declared efforts at economic reform. The government has so far reduced its massive fuel subsidies and plans to phase them out entirely over five years, granting limited allowances only to needy private citizens.

An energy crunch that led to rolling summer blackouts following the 2011 revolt has driven a search for new resources and efficiency. 

Last year, the government began importing coal, and Electricity Minister Mohammed Shaker said at the conference that he was "very impressed by modern clean coal technologies" he saw on a recent trip to China.

"Nuclear energy is now being seriously studied," he said, adding, however, that it remains a politically sensitive issue.

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