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Israel, Egypt Gas Partners Buy Control of Key Export Pipeline

Thursday 27 September 2018 02:44 PM

 Zohr gas field
Zohr gas field

The companies developing Israel’s largest natural gas fields and their Egyptian partner have bought control of a pipeline to Egypt, clearing the main obstacle to a $15 billion deal to export gas from the Jewish state to its former enemy. Shares of Israeli gas stocks rose.
Israel’s Delek Drilling LP, Noble Energy Inc. and Egyptian East Gas Co. signed a deal to buy a 39 percent stake in pipeline owner Eastern Mediterranean Gas Co., according to a statement released to the Tel Aviv bourse Thursday. The buyers will pay $518 million, with Delek and Noble contributing $185 million each and the remainder being paid by East Gas.

The agreement gives the buyers exclusive rights to lease and operate the subsea gas pipeline owned by EMG, which connects southern Israel to Egypt’s Sinai peninsula. The partners in Israeli reservoirs Tamar and Leviathan will use the EMG pipeline to implement a deal signed in February to export 64 million cubic meters of gas to Egypt over 10 years.

Egypt’s oil ministry welcomed the agreement, which eliminates legal obstacles that were impeding the export of gas from Israel to the most populous Arab country. It adds an economic dimension to a relationship dominated by security since the two countries signed a peace treaty that changed the face of the Middle East four decades ago. Delek expects gas to start flowing in “early 2019,” the statement said.

“The deal is an indication that the bilateral relationship is at its peak – probably the closest ties the two countries have had since the peace agreement in 1979,” said Riccardo Fabiani, geopolitical analyst at London-based Energy Aspects consultancy.

Ratio Oil Exploration 1992 LP and Delek, shareholders in the Leviathan field, led the gains on Israel’s main energy index. The shares climbed 4.6 percent and 3.8 percent, respectively, at 10:09 a.m. in Tel Aviv.