(Adds Egypt oil ministry source)
By Ari Rabinovitch
JERUSALEM, March 18 A group of private customers
in Egypt has agreed to buy at least $1.2 billion of natural gas
from Israel's offshore Tamar field via an old pipeline built to
send gas to Israel.
The Tamar partners said on Wednesday they signed a
seven-year deal with Dolphinus Holdings, a firm that represents
non-governmental, industrial and commercial consumers in Egypt,
that calls for a minimum 5 billion cubic meters (bcm) of gas to
be sold in the first three years.
An energy source in Israel, however, said the total export
amount in the deal could be more than three times higher,
depending on demand in Egypt, which is facing one of its worst
energy crunches in years.
The supplies will pass through an underwater pipeline
constructed nearly a decade ago by East Mediterranean Gas (EMG),
the company that oversaw a now-defunct Egyptian-Israeli natural
Egypt had been selling gas to Israel in a 20-year agreement,
but the deal collapsed in 2012 after months of attacks on the
pipeline by militants in Egypt's remote Sinai peninsula. It has
since been out of commission and EMG is suing the Egyptian
government for damages.
An oil ministry source in Egypt told Reuters the ministry
had not received any requests from private-sector firms to
"The ministry is ready to agree to gas imports from abroad
if the imports achieve the three conditions of adding value to
the domestic market, solving international arbitration disputes,
and providing gas to the market," the source said.
Recent offshore discoveries such as Tamar, with an estimated
280 bcm of gas, and Leviathan, which is more than twice as big,
have turned previously import-dependent Israel into a potential
energy exporter. Egypt has been slow in developing its own
sizable gas resources and is seeking numerous import options.
Tamar's shareholders that are traded in Tel Aviv -- Delek
Drilling, Avner Oil and Isramco Negev
-- were up 4-5 percent, outpacing modest gains in the
Texas-based Noble Energy is the field's operator.
The chairman of Delek Drilling, Yossi Abu, said the deal
shows that Israel can be "an energy anchor for countries in the
region" and that, along with a pipeline of export agreements
under negotiation, it will "radically change Israel's
The Dolphinus deal is linked to the price of Brent and is
subject to various approvals in Israel, Egypt and from EMG.
Noble and Delek, who are also developing Leviathan, have
been negotiating two larger export deals with foreign operators
of liquefied natural gas plants in Egypt, but those deals have
been on hold since Israel's competition regulator said it might
declare the developers a monopoly.
(Reporting by Ari Rabinovitch; Additional reporting by Shadi
Bushra in Cairo; Editing by Tova Cohen, Louise Heavens and David