Pipeline deal brings export of Israeli gas to Egypt within sight

An Israeli gas platform is seen in the Mediterranean sea August 1, 2014. (Reuters)
Updated 27 September 2018
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Pipeline deal brings export of Israeli gas to Egypt within sight

  • Companies operating in both Israel and Egypt will buy a 39 percent stake in the EMG pipeline
  • This comes against the backdrop of Egypt’s efforts to liberalize its gas market

JERUSALEM: Companies operating in both Israel and Egypt will buy a 39 percent stake in the EMG pipeline to enable a landmark $15 billion natural gas export deal to begin next year, the partners said on Thursday.
The $518 million purchase by Israel’s Delek Drilling , Texas-based Noble Energy and the Egyptian East Gas Co. will enable the supply of 64 billion cubic meters of gas over 10 years from Israel’s offshore Tamar and Leviathan fields to Egypt as part of the export deal signed in February.
“The partnership intends to act to close the transaction and begin piping natural gas from Israel to Egypt as early as the beginning of 2019,” Delek said in a statement.
Delek and Noble, which are partners in the Israeli gas fields, will each pay $185 million while the Egyptian East Gas Co. will pay $148 million.
This comes against the backdrop of Egypt’s efforts to liberalize its gas market and open it up to trading by private companies. “The ministry welcomes this new step by the private companies responsible for the commercial project’s implementation,” Ministry of Petroleum spokesman Hamdi Abdelaziz said in a statement.
The spokesman added that the ministry is ready to consider permit requests from the private sector to help Egypt become a regional hub for gas trading.

HISTORIC TRANSACTION

To buy into EMG, which owns a 90 km subsea pipeline between Ashkelon in Israel and El-Arish in Egypt, the three partners formed a joint company called EMED.
Egyptian East Gas also owns a pipeline between El-Arish and Aqaba, Jordan, which the EMED companies said could be used to transport additional gas supplies in the future.
“This is a historic transaction, that renders Egypt a regional energy center and positions it in line with significant global energy centers,” said Delek CEO Yossi Abu.
Shares in Delek Drilling were up 3.6 percent at midday.
The EMG pipeline originally carried gas supplies in the other direction, when Israel was buying gas from Egypt. That deal collapsed in 2012 after militants in Egypt’s Sinai peninsula carried out repeated attacks on the pipeline and EMG sued the Egyptian government for damages.
The pipeline again became an export option after the Tamar and Leviathan discoveries. Tamar began production in 2013 and Leviathan is due to come online in late 2019.
Under the new deal, EMG agreed to end arbitration with Egypt and drop claims against Cairo, Delek said.
At the start-up of the Leviathan field, Noble said it expects to sell at least 350 million cubic feet of natural gas per day to Egyptian customers.
Other shareholders in EMG are Thai energy company PTT , state-owned Egyptian company EGPC and investment group MGPC. Egyptian East Gas holds a stake on its own.
Delek and Noble have also signed deals to export gas to Jordan.


Lion Air: Passenger numbers fell less than 5 percent after deadly crash

Updated 21 min 1 sec ago
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Lion Air: Passenger numbers fell less than 5 percent after deadly crash

  • “It was under 5 percent compared to the traffic at the same month last year,” said Lion Air CEO on November passenger numbers
  • He said Lion Air did not “clearly understand” whether the crash was responsible for the fall in traffic in November

JAKARTA: Lion Air said on Monday passenger numbers dropped by less than 5 percent in November compared to a year earlier, after one of its Boeing Co. 737 MAX jets crashed in late October killing all 189 people on board.
“There was a decline but it wasn’t too significant,” the airline’s CEO Edward Sirait told television network CNN Indonesia. “It was under 5 percent compared to the traffic at the same month last year.”
He said Lion Air did not “clearly understand” whether the crash was responsible for the fall in traffic in November, which he said was a low season for travel.
The airline, Indonesia’s largest, is privately owned and does not publicly release traffic statistics or financial results.
Sirait said last week Lion Air was considering canceling orders for 737 MAX jets but it had not yet made a decision.
Sources told Reuters that relations between the airline and Boeing had worsened in a spat over responsibility for the crash.
The airline has 190 Boeing jets worth $22 billion at list prices waiting to be delivered, on top of 197 already taken, making it one of the largest US export customers.
Bankers and some analysts say Lion Air and Southeast Asian rivals over-expanded and would be comfortable with fewer orders.
Boeing has declined to comment on contractual matters but industry sources say aerospace companies rarely leave room for unilateral cancelations except in exceptional circumstances.
The cause of the Oct. 29 crash into the Java Sea has yet to be determined.