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.


Germany: US calling European cars a threat is ‘frightening’

Updated 16 February 2019
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Germany: US calling European cars a threat is ‘frightening’

  • ‘If these cars ... suddenly spell a threat to US national security, then that is frightening to us’

MUNICH, Germany: German Chancellor Angela Merkel on Saturday labelled as “frightening” tough US trade rhetoric planning to declare European car imports a national security threat.

“If these cars... suddenly spell a threat to US national security, then that is frightening to us,” she said.

Merkel pointed out that the biggest car plant of German luxury brand BMW was not in Bavaria but in South Carolina, from where it exports vehicles to China.

“All I can say is it would be good if we could resume proper talks with one another,” she said at the Munich Security Conference.

“Then we will find a solution.”

A US Commerce Department report has concluded that auto imports threaten national security, setting the stage for possible tariffs by the White House, two people familiar with the matter said Thursday.

The investigation, ordered by President Donald Trump in May, is “positive” with respect to the central question of whether the imports “impair” US national security, said a European auto industry source.

“It’s going to say that auto imports are a threat to national security,” said an official with another auto company.

The report, which is expected to be delivered to the White House by a Sunday deadline, has been seen as a major risk for foreign automakers.

Trump has threatened to slap 25 percent duties on European autos, especially targeting Germany, which he says has harmed the American car industry.

After receiving the report, the US president will have 90 days to decide whether to move ahead with tariffs.

Trump in July reached a trade truce with European Commission President Jean-Claude Juncker, with the two pledging no new tariffs while the negotiations continued.

Brussels has already drawn up a list of €20 billion ($22.6 billion) in US exports for retaliatory tariffs should Washington press ahead, the commission’s Director-General for Trade Jean-Luc Demarty told the European Parliament last month.

The White House has used the national security argument — saying that undermining the American manufacturing base impairs military readiness, among other claims — to impose steep tariffs on steel and aluminum imports, drawing instant retaliation from the EU, Canada, Mexico and China.

Trading partners have sometimes reacted with outrage at the suggestion their exports posed a threat to US national security.