Arish–Ashkelon Pipeline

From Global Energy Monitor
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Arish-Ashkelon is a natural gas pipeline, running between Israel and Egypt. While initially designed as a branch pipeline to transport gas from the Arab Gas Pipeline to Israel, it has been reconfigured to ship gas from Israel's offshore gas fields to Egypt.

Location

The pipeline is a subsea pipeline running from Ashkelon, Southern district, Israel, to Arish, North Sinai governorate, Egypt. It was originally built to connect with the Arab Gas Pipeline in Arish.

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Project Details

Background

The pipeline was built and is operated by the East Mediterranean Gas Company (EMG), a joint company of Mediterranean Gas Pipeline Ltd (28%), the Israeli company Merhav (25%), PTT (25%), EMI-EGI LP (12%), and Egyptian General Petroleum Corporation (10%).[2] The pipeline became operational in February 2008, at a cost of $180–$550 million (the exact figure is disputed).[3] It has since ceased operation due to sabotage of its feeder pipeline in Sinai and gas shortages in Egypt. However, although originally intended for transporting gas from Egypt to Israel, the gas shortages in Egypt have raised the possibility of someday operating the pipeline in the opposite direction, i.e., from Israel to Egypt.

Initial supply agreement

Egypt and Israel had originally agreed to supply through the pipeline 1.7 billion cubic metres (60 billion cubic feet) of natural gas per year for use by the Israel Electric Corporation.[4] This amount was later raised to 2.1 billion cubic metres (74 billion cubic feet) per year to be delivered through the year 2028. In addition, by late 2009, EMG signed contracts to supply through the pipeline an additional 2 billion cubic metres (71 billion cubic feet) per year to private electricity generators and various industrial concerns in Israel and negotiations with other potential buyers were ongoing. In 2010, the pipeline supplied approximately half of the natural gas consumed in Israel, with the other half being supplied from domestic resources. The total physical capacity of the pipeline is 9 billion cubic metres (320 billion cubic feet) per year and agreements between the two nations provide a framework for the purchase of up to 7.5 billion cubic metres (260 billion cubic feet) per year of Egyptian gas by Israeli entities, potentially making Israel one of Egypt's most important natural gas export markets. In 2010 some Egyptian activists appealed for a legal provision against governmental authorities to stop gas flow to Israel according to the obscure contract and very low price compared to the global rates, however the provision was denied by Mubarak regime for unknown reasons. In 2011, after the Egyptian revolution against Mubarak regime, many Egyptians called for stopping the gas project with Israel due to low prices. After a fifth bombing of the pipeline, flow had to be stopped for repair.[5][6]

2012 cancellation

Following the removal of Hosni Mubarak as head of state, and a perceived souring of ties between the two states, the standing agreement fell into disarray. According to Mohamed Shoeb, the head of the state-owned EGAS, the "decision we took was economic and not politically motivated. We canceled the gas agreement with Israel because they have failed to meet payment deadlines in recent months". Israeli Prime Minister Benjamin Netanyahu also said that according to him the cancellation was not "something that is born out of political developments". However, Shaul Mofaz said that the cancellation was "a new low in the relations between the countries and a clear violation of the peace treaty".[7] Eventually, gas shortages forced Egypt to cancel most of its export agreements to all countries it previously sold gas to in order to meet internal demand.

Subsequent litigation

The Egyptian state entities supplying the pipeline attempted to declare force majeure in cancelling the gas agreement with EMG and the Israel Electric Corporation, while the latter contented the cancellation amounted to a unilateral breach of contract. The matter was referred to the International Court of Arbitration of the International Chamber of Commerce in Geneva. After four years of proceedings the arbitration panel ruled against Egypt and ordered it to pay approximately US$2 billion in fines and damages to EMG and the IEC for unilaterally cancelling the contract. Egypt then appealed the panel’s decision to the Swiss courts, who also ruled against Egypt in 2017.[8][9]

Reverse flow agreement

Since the Egyptian revolution, Egypt has been experiencing significant domestic shortages of natural gas, causing disruptions and financial losses to various Egyptian businesses who rely on it, as well as curtailing exports of natural gas from Egypt through the Arab Gas Pipeline (even during periods when it has been available for operation) and via LNG export terminals located in Egypt. This situation raised the possibility of using the Arish-Ashkelon Pipeline to send natural gas in the reverse mode.

In March 2015, the consortium operating Israel's Tamar gas field announced it reached an agreement, subject to regulatory approvals in both countries, for the sale of at least 5 billion cubic metres (180 billion cubic feet) of natural gas over three years through the pipeline to Dolphinus Holdings – a firm representing non-governmental, industrial and commercial consumers in Egypt.[10][11] In November 2015 a preliminary agreement for the export of up to 4 billion cubic metres per annum (140 billion cubic feet per annum) of natural gas from Israel's Leviathan gas field to Dolphinus via the pipeline was also announced.[12][13] The cost of converting the pipeline to allow for flow in the reverse direction is estimated at US$10 to $20 million.

In November 2019, the consortium EMED, consisting of Israel's Delek Drilling, U.S. firm Noble Energy and Egypt's East Gas Company, finalized a deal to buy a 39% stake in the pipeline, with the remaining 61% continuing to belong to the consortium Mediterranean Gas Pipeline Ltd.[1] The consortium had been negotiating the deal since 2018, and had completed work to convert and rehabilitate the pipeline.[14][15] In January 2020, Israel began shipping gas from the Tamar field to Egypt, ending a six-year period in which the pipeline had been unused. Shipments were initially 200 million cubic feet per day, with plans to increase to 500 million. The gas export deal was signed with Egyptian firm Dolphinus Holdings, for sale of 85.3 billion cubic meters of gas over 15 years. While some of the gas was to be used in Egypt for domestic consumption, the remainder was intended to be re-exported to Europe through one of Egypt's LNG facilities.[16][17][18]

In February 2020, militants from Daesh (Islamic State of Iraq and the Levant) blew up a gas pipeline in Sinai peninsula, thinking that they were destroying the Arish–Ashkelon Pipeline, and stating that they had destroyed "the natural gas line linking the Jews and the apostate Egyptian government." According to government officials, the pipeline destroyed was a domestic pipeline, and the Arish–Ashkelon Pipeline continued to carry gas uninterrupted.[19]

Articles and resources

References

  1. 1.0 1.1 Israel-Egypt gas pipeline deal, explained, TRT World, 4 Nov. 2019.
  2. PTT Buys 25% of East Mediterranean Gas Company PennWell Corporation, Oil & Gas Journal, 7 December 2007, Accessed 5 February 2011
  3. IEC may seek partial ownership of Egyptian pipeline Globes, Accessed 2 October 2011
  4. Egyptian Gas flows to Israel Upstream Online, NHST Media Group (subscription required), Accessed 10 March 2008
  5. Egypt's Dilemma After Israel Attacks Business Insider, 19 August 2011, Accessed 20 August 2011
  6. Seventeen killed in Israel attacks Buck, Tobias; Saleh, Heba; Financial Times (subscription required), 18 August 2011, Accessed 20 August 2011
  7. Egypt-Israel natural gas deal revoked for economic reasons Sanders, Edmund, Los Angeles Times, 23 April 2012
  8. Egyptian companies lost major ICC energy dispute to Israel Rigby, Ben, African Law & Business, 11 May 2017, Retrieved 17 January 2018
  9. Swiss court tells Egyptian energy companies to compensate Israel Reuters, 28 April 2017, Retrieved 16 January 2018
  10. Israel's Tamar group to sell gas to Egypt via pipeline Rabinovitch, Ari, Reuters, 18 March 2015, Retrieved 18 March 2015
  11. "דולפינוס פתחה במו"מ עם EMG להולכת הגז ממאגר תמר למצרים" Gutman, Lior, Calcalist, Retrieved 6 May 2015
  12. Developers of Israel's Leviathan field sign preliminary Egypt gas deal Scher, Steven; Rabinovitch, Ari, 25 November 2015, retrieved 29 November 2015
  13. Egypt's Dolphinus Expects Gas Import Deal with Israel in Months Feteha, Ahmed; Elan, Tamim, Bloomberg, 2 December 2015, retrieved 2 December 2015
  14. Yaacov Benmeleh & Mirette Magdy, Israel, Egypt Gas Partners Buy Control of Key Export Pipeline, Bloomberg, 26 Sept. 2018.
  15. Mirette Magdy, Israeli and Egyptian Partners Take Control of Key Gas Pipeline, Bloomberg, 3 Nov. 2019.
  16. Salma El Wardany, Israeli gas finally reaches Egypt as mega deal bears fruit, World Oil, 15 Jan. 2020.
  17. Egypt's push to be east Mediterranean gas hub, Reuters, 15 Jan. 2020.
  18. Israel begins exporting natural gas to Egypt, Al Jazeera, 15 Jan. 2020.
  19. Gas pipeline in Egypt's Sinai attacked, Israel imports unaffected, Al Jazeera, 3 Feb. 2020.

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External resources

This article uses content from the Wikipedia page "Arab Gas Pipeline," under the terms of the GNU Free Documentation License.

External articles