Gas Cutoff Believed to Impair Egypt More than Israel (INN) ISRAEL NATIONAL NEWS) By Rachel Hirshfeld 04/24/12)
INN} ISRAEL NATIONAL NEWS
INN} ISRAEL NATIONAL NEWS Articles-Index-Top
State owned Egyptian Natural Gas Holding Company´s (EGAS)
cancellation of the gas supply and purchasing agreement with East
Mediterranean Gas Company (EMG) will have little effect on Israel,
says Citi Capital Markets.
The company added that the agreement is likely to impair Egypt more
than Israel, Globes reported.
Citi says that the disruptions in Egyptian gas deliveries in 2011 and
the first quarter of 2012 have given Israel Electric Corporation
(IEC) plenty of opportunity to find alternative sources of supply,
particularly since the agreementís suspension is unlikely to have
come as a surprise.
"Although the Israeli Ministry of Finance estimated that Egyptian gas
suspensions have cost Israel NIS 15bn (1.7% GDP), we donít think that
the damage to Israel is particularly visible. And since Israelís
offshore gas field Tamar is due to begin production in April 2013,
any further domestic shortfalls are likely to be relatively brief,"
the company said.
Citi added, "Long-run costs may outweigh any short-run benefits. Few
details of the gas agreement are known, but Egypt is widely reported
to have been supplying gas to Israel at below-market prices. The
deterioration in Egyptís relationship with Israel is likely to lead
to economic costs in future. Although Egyptís gas exports have no
formal status within the Camp David accords that govern Egyptian-
Israeli relations - Egypt was not a gas exporter in 1979 - this
weekís news is perceived as a symbolic devaluation of Camp David,
which in turn could have real-money consequences for Egypt in two
These effects include greater risk of reduced America aid. Although
$1.3 billion has already been approved for 2012, future aid
allocations are growing less likely. The decision also jeopardizes
Egypt´s Qualifying Industrial Zones (QIZs), which generated almost $1
billion in exports in 2011, Globes reported. (IsraelNationalNews ©
Return to Top
MATERIAL REPRODUCED FOR EDUCATIONAL PURPOSES ONLY