Israel Approves Natural Gas Exports to Egypt

Israel's government has given the go ahead to begin exporting natural gas to Egypt, signalling a potential improvement in relations between two countries which have been at loggerheads over energy supplies.

Israel will be able to sell 5 billion cubic meters (bcm) of gas to Egypt in the coming seven years from the Tamar site off its Mediterranean coast, Energy Minister Yuval Steinitz said in a statement on Thursday.

"After years of delay and debate, we are starting to move forward and to position Israel as a regional natural gas power," he said.

Israel, long an importer of gas, has seen its fortunes transformed by big gas discoveries such as the Tamar field.

Egypt had been selling gas to Israel under a 20-year agreement, but that collapsed in 2012 after months of attacks on the pipeline by militants in Egypt's remote Sinai peninsula.

An international arbitrator this month said Egypt should pay nearly $2 billion in compensation from the halt in the gas supply, leading to tensions between the two neighbours.

Egypt said it would appeal the decision and freeze talks to import gas from Israel. It was unclear whether the Israeli government's decision to approve exports meant the two countries have made progress in resolving their differences.

Earlier this year, the Tamar partners signed a seven-year deal for Egypt's Dolphinus Holdings - a firm that represents non-governmental, industrial and commercial consumers - to buy at least $1.2 billion of natural gas in a deal that calls for a minimum of 5 bcm of gas to be sold in the first three years.

Tamar, with estimated reserves of 280 bcm, is owned by Texas-based Noble Energy as well as Delek Drilling and Avner Oil Exploration - two units of the Delek Group.

They have said the agreement to supply gas to Egypt still hinges on regulatory and other approvals.

The companies also control the much larger nearby Leviathan field, whose development was approved last week.

For more information about related Opportunities and Key Players visit Egypt Oil and Gas Projects