‘No shame’ in Egypt using Israeli gas through British oil company: Petroleum minister

Egyptian government struggles to contain discontent of BG Group, which had to stop supplying Egyptian gas for export because of fuel shortage

Importing gas from other countries will prevent gas companies operating in Egypt from resorting to international arbitration to sue the government.

(AFP 

Minister of Petroleum and Mineral Resources Sherif Ismail does not mind allowing British BG Group to import gas from Israel, he told Daily News Egypt Wednesday. Import is necessary to prevent gas companies working in Egypt from resorting to international arbitration to sue the government, he said.

“As the Minister of Petroleum, I remain of the opinion that there is no problem in letting BG Group import Israeli gas to protect Egypt from international fines and arbitration,” Ismail added. The company has not yet requested the government to begin the process of importing gas, he said, and it will only be allowed to import after approval and the signing of an agreement with the Egyptian government.

“There is no embarrassment in Egypt using the gas the BG Group imports from Israel given our economic issues,” the minister went on. He stated that politically speaking, the president and the government working indirectly with Israel “is no longer taboo”.

“Whatever is in Egypt’s interest must be implemented immediately as we are dealing with an energy crisis,” the minister said.

Ismail noted that the British company has only signed a letter of intent as an initial agreement to start negotiating with partners in the Leviathan gas field to import natural gas from Israel to a BG Group liquefaction plant in Idku, Egypt.

In earlier statements, the BG Group has claimed that the Egyptian government did not respect its agreements and that it has been pumping more gas to the domestic  market. Ismail has responded to this stating that Egypt’s local gas needs are growing while it suffers a shortage in production, but that he is in talks with the British company to stop any international arbitration against Egypt.

In a statement last Sunday, partners working in the Leviathan gas field stated that an agreement was currently being discussed. The field, located close to the Israeli coast on the Mediterranean Sea, will provide 7bn cubic metres of gas annually for a period of 15 years through a subsea pipeline to the BG Group in Egypt.

Egypt suffers from a fuel shortage and a severe decline in production by foreign partners as a result of the Egyptian government failing to pay its debts. The government cut energy subsidies Saturday in a move to reduce the budget deficit and decrease energy waste.

BG Group will pay Israel close to $30bn to use the Leviathan gas field. BG is building the pipeline and it is expected that a final agreement will be reached by the end of 2014.

BG said that conversations regarding the use of the Leviathan come in the framework of a number of options under consideration to increase supplies of gas to fuel stations in Egypt. “The letter of intent is non-binding for Leviathan partners, as it is only an initial step and we are still in the early stages,” BG Group said.