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Thursday, June 02, 2011

Is it really just the price?

Egypt says that it's reviewing its contract to supply natural gas to Israel. But it's trying to put that review in a context of reviewing all of its contracts with foreign buyers, including those contracts' pricing provisions.
Egypt is reviewing the timetable for resuming gas exports to Israel and wants to negotiate more flexible contracts with foreign gas buyers, the Egyptian oil minister said on Thursday.

Asked when Egypt would resume the exports, Petroleum Minister Abdullah Ghorab said the issue was "under review".


Israel received natural gas from Egypt under a 20-year deal signed in 2005, but flows were halted when an armed gang attacked a metering station in North Sinai on April 27.

Supplies have been halted for over a month, and US investors in the company that operates the Israel export pipeline, Ampal American Israel Corp, have taken legal steps against Egypt's government to ensure gas flows resume.

Israel gets up to 45 percent of its natural gas from Egypt.

Egypt said in April it would review its gas contracts with other states, including Israel and Jordan, amid accusations that the government of deposed President Hosni Mubarak had improperly negotiated the sale of gas at preferential prices.

In an apparent reference to Egypt's efforts to renegotiate gas terms, Ghorab said on Thursday he favored flexible contracts and pricing formulas to allow a "fair and sustainable relationship between sellers and buyers".

"This was exactly our understanding in Egypt of how this relation should be when we got into a renegotiation process for revising Egyptian export gas prices for our long-time contracts that have been accomplished a long time ago under completely different world market conditions," Ghorab said.
The rhetoric in the media indicate that this has nothing to do with pricing or market conditions. And even if the current military regime restores Israel's gas supplies on whatever terms, I would not expect that supply to continue if the Muslim Brotherhood takes over.

But perhaps this is why the Egyptians are at least talking in terms of prices and market conditions.

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At 5:43 AM, Blogger Sunlight said...

Drill, baby, drill!


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