Egypt-Israel Settlement Paves Way For Groundbreaking Gas Shipments

21 Jun 2019 Issue: 62 / 25 By: Peter Stevenson

Testing of the EMG offshore gas pipeline is near-complete but significant Israel-to-Egypt volumes await the late-2019 start-up of key Leviathan field. With Israel gas grid constraints then set to cap shipments, the Leviathan partners plan additional shipments via the ‘Arab Gas Pipeline’ in a move sure to raise geopolitical eyebrows.

Israeli state power firm IEC has agreed to accept a knockdown $500mn in damages for Cairo’s unilateral halting of Egyptian piped gas supplies to Israel in 2012. The deal clears a key obstacle to the planned use of the same East Mediterranean Gas (EMG) pipeline to supply Israeli gas to Egypt from later this year.

The Geneva-based International Chamber of Commerce in 2015 ruled that Egyptian state firms EGPC and Egas should pay IEC $1.76bn in damages (MEES, 11 December 2015). But it proved a pyrrhic victory. As US-based Noble Energy and its Israeli partner Delek have clamored to use the mothballed route as a means of tapping Egypt’s market (and its under-used LNG liquefaction facilities) for their key Leviathan and Tamar discoveries offshore Israel, the key impediment has been IEC’s unpaid dues. (CONTINUED - 1805 WORDS)