{"id":632856,"date":"2018-02-21T03:57:00","date_gmt":"2018-02-21T03:57:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2018\/02\/21\/israel-gas-deal-supports-egypts-economic-momentum\/"},"modified":"2018-02-21T03:57:00","modified_gmt":"2018-02-21T03:57:00","slug":"israel-gas-deal-supports-egypts-economic-momentum","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2018\/02\/21\/israel-gas-deal-supports-egypts-economic-momentum\/","title":{"rendered":"Israel gas deal supports Egypt\u2019s economic momentum"},"content":{"rendered":"

The Oil Ministry dropped its biggest hint yet that the government will approve a USD 15 bn pact to import gas from Israel.<\/strong> \u201cThe agreement between [Noble Energy, Delek and Dolphinus] to import gas from Israel will be subject to Egyptian regulations governing gas imports,\u201d Oil Ministry spokesperson Hamdy Abdel Aziz said in a statement on Tuesday (pdf)<\/a>. \u201cEgypt\u2019s strategy to becoming a regional energy hub and achieving an energy surplus by 2019 will involve Egypt importing gas from Israel and Cyprus,\u201d he added.<\/p>\n

And here\u2019s the kicker: Importing gas from Israel will go a long way to getting past outstanding issues with international arbitration<\/strong>, said Abdel Aziz. This is the first overt indication by the government that the USD 1.76 bn arbitration award against EGAS and EGPC in favor of Israeli Electric \u2014 the Ismail Cabinet\u2019s sticking point on any imports of gas from Israel \u2014 may be on its way to being resolved.<\/p>\n

Quick resolution may be in Israel\u2019s best interest, as its government should be collecting around 50% of all revenues from the Dolphinus sale,<\/strong> the Israeli Natural Gas Authority\u2019s former chief economist, Miki Korner, tells Jerusalem Post<\/a>. \u201cAs soon as one of the pipelines is activated \u2014 which could take a few years \u2014 operators of Israeli natural gas will getting around USD 1-1.5 bn annually,\u201d he says. \u201cThe state gets to impose a 12.5% royalty tax on the revenue from natural gas\u201d and will collect both income and excess-profit taxes in excess of 20% each. Korner notes that while the agreement is a reflection of good relations between the two countries, \u201cgas exports could create complications, with commercial disputes and supply problems possibly shadowing otherwise strong security cooperation.\u201d<\/p>\n

The pact continues to capture the imagination of the international business press. <\/strong>Look for the agreement to kickstart economic momentum, Abu Dhabi Commercial Bank Chief Economist Monica Malik tells Bloomberg TV<\/a>. \u201cThere are a number of positive developments, which should give positive tailwinds to the Egyptian economy,\u201d Malik says. The development in Egypt\u2019s own gas market is \u201cfar more important,\u201d she adds, saying increased production will support the economy and improve external accounts. Salma Wardany added that Egypt could be facing \u201ca possible over-abundance\u201d of natural gas following the agreement<\/strong>, in a piece for Bloomberg<\/a>.<\/p>\n

The sticks-in-the-mud: <\/strong><\/p>\n