Israel starts exporting natural gas to Egypt under landmark deal

The gas is being supplied via a subsea pipeline connecting Israel and Egypt’s Sinai peninsula. (File/AFP)
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Updated 15 January 2020

Israel starts exporting natural gas to Egypt under landmark deal

  • A private firm in Egypt, Dolphinus Holdings, will purchase 85 billion cubic meters (bcm) of gas, worth an estimated $19.5 billion, from Israeli fields
  • Israeli officials have called the export of gas to Egypt the most significant deal to emerge since the countries signed a historic peace treaty in 1979

JERUSALEM/CAIRO: Israel began exporting natural gas to Egypt on Wednesday under one of the most important deals to have been signed by the neighbors since they made peace decades ago.
A private firm in Egypt, Dolphinus Holdings, will purchase 85 billion cubic meters (bcm) of gas, worth an estimated $19.5 billion, from Israel’s Leviathan and Tamar offshore fields over 15 years.
Yossi Abu, CEO of Israel’s Delek Drilling, one of the partners in Leviathan and Tamar, said the landmark arrangement “marks a new era in the Middle East energy sector.”
Israel will initially export 200 million cubic feet of gas per day to Egypt, two Egyptian industry sources said. Gas from Leviathon will be supplied to Dolphinus at a rate of 2.1 bcm per year, rising to 4.7 bcm per year by the second half of 2022, according to Delek.
The gas is being supplied via a subsea pipeline connecting Israel and Egypt’s Sinai peninsula.
Exports of Tamar gas to Dolphinus are expected to start later this year.
Israeli officials have called the export of gas to Egypt the most significant deal to emerge since the countries signed a historic peace treaty in 1979.
Egypt is hoping the deal will help it become a regional energy hub, with some of the gas expected to be re-exported to Europe through liquefied natural gas (LNG) plants.
The North African country is currently exporting one billion cubic feet of gas to Europe every month via 10 shipments, the country’s petroleum minister said in remarks published on Wednesday.
Tarek El Molla also told El Watan newspaper that Egypt wanted to boost gas shipments to Europe to 20 a month after restarting the Damietta LNG plant.
Damietta has been idled for years due to a lack of gas supply during a dispute with Union Fenosa Gas (UFG), a joint venture between Spain’s Gas Natural and Italy’s Eni.
Damietta is 80% owned by UFG, with the remaining 20% split evenly between the state-owned Egyptian Natural Gas Holding Company and the Egyptian General Petroleum Corporation.
Molla also said Egypt was planning a bidding round for oil drilling in the western Mediterranean Sea and was in talks with Chevron, Exxon Mobile and Total.


IMF cuts global growth forecast and flags Middle East security worries

Updated 26 min 8 sec ago

IMF cuts global growth forecast and flags Middle East security worries

  • International economy is receiving significant boost — 0.5 percentage point of growth last year and this year
  • But IMF warns global economy continues to face array of risks

LONDON: The International Monetary Fund (IMF) lowered its global growth predictions for 2020 despite a slightly improving world economy and warned that geopolitical tensions in the Middle East could impact global oil supplies.

It expects world economic growth to accelerate be 2.9 percent last year, rising to 3.3 percent in 2020 and 3.4 percent in 2021.

The IMF released the figures ahead at the World Economic Forum in Davos, Switzerland.

“Rising geopolitical tensions, notably between the United States and Iran, could disrupt global oil supply, hurt sentiment and weaken already tentative business investment,” the IMF said.

The Middle East and Central Asia is expected to record 2.8 percent growth in 2020, slightly lower than the IMF's October outlook and reflecting a downward revision to Saudi Arabia’s oil output following last month’s decision by the OPEC+ group to extend supply cuts.

It expects the region to pick up speed in 2021 with growth of 3.2 percent.

IMF chief economist Gita Gopinath said: “We’ve seen clearly a rise in geopolitical tensions in the Middle East. We still have to see how far this goes. If you look at oil prices the reaction has been fairly muted at this point. We’ve seen some increase of about 3 to 4 dollars in the price of oil but nothing very large.”

Regional tensions have escalated sharply after the killing of a top Iranian commander in Baghdad, triggering Iranian retaliatory attacks.

“Prospects for several economies remain subdued owing to rising geopolitical tensions (Iran), social unrest (including in Iraq and Lebanon), and civil strife (Libya, Syria, Yemen),” the IMF said.

Although overall risks to the global economy have reduced over the year, the IMF warned that outcomes “depend to an important extent on avoiding further escalation” between Washington and Beijing.

It also flagged the possibility of new trade tensions emerging between the US and the EU.

“The reality is that global growth remains sluggish,” said IMF Managing Director Kristalina Georgieva. “We are all adjusting to live with the new normal of uncertainty.”