Jordan agrees to raise Egyptian gas prices, Israel stands firm
Ahram Online and agencies, Tuesday 16 Aug 2011
Israel claims that the current price of gas is on par with international levels and refuses to accept an increase

Jordan’s cabinet has agreed to raise the price of the natural gas it imports from Egypt, an informed governmental sourcetold the Jordanian daily, Al-Arab Al-Youm on Tuesday.

The source claims that the cabinet has approved a new contract to raise gas prices, having reviewed its terms and considered the advice of the Ministerial Economic Development Committee.

Khaled Touqan, Jordan’s minister of energy will soon leave for Cairo to sign the contract, and then gas supplies will alter their prices accordingly.

Jordanian authorities say that the supply of Egyptian natural gas saw a sharp decline in 2010 and continued to fall this year. This was due to frequent interruptions of supplies with repeated bombings of Jordan’s gas pipeline, amounting to five explosions since last February.

The gas agreement between Egypt and Jordan was signed in 2004 and stipulated that Egypt would supply the kingdom with 2.4 billion cubic metres annually for a period of 15 years. This amount is enough to supply approximately 80 Per cent of the kingdom's electrical needs; the remainder is produced by heavy fuel.

The Jordanian government is exploring several options for the supply of natural gas from other countries in addition to Egypt; notably Russia and Qatar, in order to avoid interruption of gas supplies to the kingdom; which Jordan says it costs up to US$5 million a day.

The kingdom's Minister of Finance announced in July that Jordan's electricity companies have lost 637 million dinars (US$899m) due to the disruption of this year's Egyptian gas supplies.

Jordan imports 96 Per cent of its energy from Egypt, Saudi Arabia and Iraq.

Israel, which depends on Egyptian natural gas for 40 Per cent of its energy, has also been affected by the repeated interruption of the supply.

Israeli board members in the carrier company, Eastern Mediterranean Gas Company (EMG), have announced they will seekUS$8 billion in reparations from Egypt for the continuous supplydisruptions.

Nimrod Novik, a senior Israeli energy executive and an EMG board member,said that the Oil and Gas Journal report from July shows that the far-reaching price concessions the company has given to the Egyptian government has not ensured a reliable gas supply for the Israeli energy market.

Egypt is reportedly preparing a request of its own from the International Centre for the Settlement of Investment Disputes, demanding to re-price the gas it sells Israel; which is widely regarded as unfair inside Egypt.

Israel claimed earlier that the price it pays for Egyptian gas is on par with international levels, and that it will not engage in any price negotiations as prices already increased about a year ago.

"EMG's price is higher than that of any other Egyptian export venue, is better than other regional exporters receive and is in line with international prices," Novik said.

The 20-year natural gas deal signed between Israel and Egypt in 2005 is one of the most important outcomes to emerge from the historic 1979 peace treaty.

In an effort to protect the interests of the two sides, Israel has recently approved the deployment of 1,000 extra Egyptian army troops in Sinaito clamp down on militants who have staged attacks on the gas pipeline.

The number of Egyptian forces in Sinai is limited by the terms of the 1979 Israel-Egypt peace treaty, but Egypt has requested to reinforce its security presence there to maintain a strong grip on the strategic peninsula.