According to initial reports, Egyptian gas was expected to flow again to Israel by February 17. However, Egyptian gas exports to the Hebrew state remain as of yet suspended. According to a report published by Maariv on March 7, senior officials in Jerusalem stressed that there are no obstacles of a technical nature hindering the resumption of Egyptian gas flow to Israel through the designated pipeline in the Sinai Peninsula. Gas flow through this pipeline had ground to a halt when an explosion hit a nearby pipeline almost a month ago, causing considerable damage to the pipeline. The Egyptian authorities, at the time, stopped pumping gas in both pipelines. While the Egyptians claim technical problems are causing the holdup, the officials maintain that the problem is political, as Egypt is wary about making any moves that could be interpreted as political gestures towards Israel (Source: Journal of Palestinian Studies/Institute for Palestine Studies, excerpts from Hebrew newspapers). Maariv also mentioned that senior officials in Israel have recently contacted their Egyptian counterparts, but to no avail. The Israeli officials hope that this problem will be resolved with the formation of a new Egyptian cabinet and the appointment of a new Minister of Petroleum (Since this article was published, a new Egyptian cabinet and petroleum minister have indeed been appointed. However, Egypt continues to suspend all gas exports to Israel). The resumption of pumping operations means that gas would flow again through the designated pipeline, which extends from El Arish to a special storage facility near the city of Ashkelon. In the newspaper issue mentioned above, Maariv also mentioned that the Americans are conducting behind-the-scenes mediation efforts to ensure Egyptian natural gas exports to Israel are resumed at the earliest possible opportunity. The Arish-Ashkelon pipeline is approximately 100 km long, and extends beneath the Mediterranean Sea. Although not officially a branching line of the Arab Gas Pipeline that extends to Jordan, Syria, Turkey and Europe, it indeed does branch off the latter in Egyptian territories. The pipeline was built and is operated by the East Mediterranean Gas Company (major shareholders include the Egyptian General Petroleum Corporation, the Israeli company Merhav, and an American-Israeli Company), and had come online in the first half of 2008. The initial plan was to supply the state-owned Israeli Electric Corporation with approximately 1.7 billion cubic meters of gas annually, over a period of 20 years. This was subsequently increased to 2.1 billion cubic meters annually until 2008. In late 2009, the pipeline operator signed a second agreement to provide around 2 billion cubic meters annually over two decades to private Israeli electric companies and industrial plants, starting with the first half of this year (the maximum capacity of the pipeline is 9 billion cubic meters annually). In 2010, the pipeline secured nearly half of Israel's natural gas demand, with the remaining half having been secured through its fields in southern waters, in addition to the use of other types of fuel. In truth, Egypt had offered its gas at prices much lower than international prices, in the midst of negotiations between British Gas and the Israeli authorities for the sale of Palestinian gas, and so the former could develop the Gaza Marine field in the waters of the Gaza Strip. However, the Egyptian-Israeli gas agreement put an end to these negotiations, along with the development plans for the Gaza Marine field. Today, the former Egyptian Minister of Petroleum Sameh Fahmy is being accused of having sold Egyptian gas to Israel at less than international prices (Recently, the agreed price ranged from 4 to 4.5 dollars per one million British Thermal Units (BTU), compared to the international price of 5 to 9 dollars per one million BTU). According to the Egyptian daily Al-Ahram, he is charged with squandering public funds as a result of the gas sale deal with Israel. In addition, Alaa and Gamal Mubarak are facing charges of receiving huge commissions in return for supporting this deal. Another high-profile name involved in this deal is Hussein Salem, formerly from the Egyptian intelligence services, and a Mubarak family friend. What is the nature of Israel's need for Egyptian natural gas then? Currently, Israel has only one productive marine gas field off the city of Ashkelon. It is relatively small in size, with blocks extending into nearby Palestinian waters. The information available on this field indicates that its reserves in both the Israeli part and the Palestinian part (where the field's reserves are exploited without the consent of or compensation to the Palestinian authorities) will be depleted in early 2013. With regard to the important discoveries made in the northern waters (such as the Tamar Field), production there will not begin until the first quarter of 2013. In fact, Israel had entered in an agreement with Egypt over gas supplies before these important discoveries were made in northern waters. The goal behind importing Egyptian gas was to diversify energy sources, and as such, Israel had been simultaneously negotiating with Russian and Azerbaijani parties to import additional quantities through Turkey. This is in addition to the smaller gas discoveries made in its southern waters. The primary goal was to use gas in lieu of imported coal, as gas is a cleaner source of energy. With respect to reliance on multiple and diverse sources for gas supplies, this is normal. Importing countries, for security reasons, prefer not to rely on one single source for their energy imports, which explains the need for diversification. Another facet of the significance of the gas agreement with Egypt lies in its strategic context relative to Israeli relations with Egypt. The halt of Egyptian gas supplies will mean that Israel will have to return to using coal or diesel to generate electricity, as it had been doing in the past. This would continue until production from the Tamar Field begins in the first quarter of 2003. This will also mean that Israel will bear the higher cost of importing alternatives during the interim phase. Even if we assume that Egypt will resume its gas exports to Israel, prices at which this gas will be sold would be higher than before. *. Mr. Khadduri is an energy expert
