The Israel Electric Corporation (IEC) board of directions on Sunday approved the natural gas deal with Egypt, despite harsh criticism from some board members and the Ministry of National Infrastructures.
The Ministry supported instead the Efyptian deal negotiations with British Gas, which offers gas from Palestinian sources off Gaza.
The vote was 9:5, with two abstentions. The board accepted the proposal for the 15-year, $2.5 billion deal.
According to Globes newspaper, the most problematic clause in the contract is the $180 million bank guarantee IEC is giving to Egypt, while Eastern Mediterranean Gas (EMG), Israeli businessman Joseph Maiman, Egyptian businessman Hussein Salem and the Egypt National Gas Company, will not provide an equivalent counter-guarantee.
Following the approval, IEC declared "The huge deal to buy natural gas from Egypt is underway. The IEC board of directors approved the agreement in principle between IEC and EMG to buy natural gas from Egypt. IEC will buy a projected 1.2 billion cubic meters of gas a year beginning in July 2006, and a projected 1.7 billion cubic meters of gas a year for 14 years beginning in July 2007. In January 2001, the IEC board declared the company the winner in a tender to supply gas.
"The IEC board decided that Egypt is the winner and instructed the IEC management to reduce the amount it would buy from Egypt from 2.5 billion cubic meters a year to 1.7 billion cubic meters a year, and to negotiate an additional amount of 1.7-1.8 billion cubic meters from the Israeli group Yam Thetis, on the condition that it lower the price to that of the Egyptian supplier. They did so and a contract was signed."
The Israeli move is part of a plan to make natural gas a sources for some 60% of all electricity production in Israel. (menareport.com)
© 2004 Mena Report (www.menareport.com)
