Egypt, Israel sign 15-year $2.5 billion natural gas deal
- Egypt, Israel sign 15-year $2.5 billion natural gas deal
By Amiram Cohen and Agencies
CAIRO - Egypt and Israel yesterday signed a long-delayed $2.5 billion
agreement on sales of Egyptian natural gas to Israel, underscoring improved
ties between the two countries.
Egyptian Oil Minister Sameh Fahmy signed the agreement in Cairo with visiting
Minister of National Infrastructure Benjamin Ben-Eliezer, who earlier had held
talks with Egyptian President Hosni Mubarak.
Under the 15-year deal, Egypt will sell 1.7 billion cubic meters of gas a year
to the Israel Electric Corporation (IEC) starting in October 2006 - a total of
about 25 billion cubic meters, Israeli officials said last week. There will be
an option to extend the deal for a further five years.
But Ben-Eliezer, asked at the signing ceremony when deliveries would start,
said, "I hope it is, as has been promised, in something like two years."
"This is a historic day because ... this will be the best indicator to show
everyone that the peace between Israel and Egypt is solid," he said.
State-owned IEC approved an agreement more than a year ago with Eastern
Mediterranean Gas EMG, a private Israeli-Egyptian firm, to buy gas from Egypt.
Talks on gas sales had begun in the 1990s, but the essential political
agreement was held up by frosty relations between the countries.
Relations have improved as Israel prepares to withdraw from the Gaza Strip.
Egypt brokered a cease-fire declared by armed Palestinian organizations in
Over the next year and a half, EMG will build a gas pipeline from Egypt to
At yesterday's meeting, Mubarak and Ben-Eliezer agreed that the two states
would initiate additional joint economic projects, to strengthen both
economies and the peace accord between them. Mubarak called this "an historic
Under the gas deal, the Egyptian government will not liable for any income or
other taxes to Israel on the supply contract, but the Israeli partner of EMG -
Merhav, which is controled by Israeli businessman Yosef Maiman - will be
liable for capital gains taxes.
Notably absent from yesterday's historic occasion was chairman of the IEC,
Shlomo Rothman. Sources close to Ben-Eliezer said that only those directly
connected to the negotiations had been invited. However, it is known that the
two are barely on speaking terms, disagreeing principally on matters
concerning the future restructuring and planned privatization of the
electricity monopoly. Rothman supports such reforms, while Ben-Eliezer has
publicly called for them to be put on hold for several years.