Identifier
Created
Classification
Origin
05CAIRO4972
2005-06-30 13:01:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

EGYPT AND ISRAEL SIGNED GAS DEAL

Tags:  EINV ENRG EPET ETRD 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L CAIRO 004972 

SIPDIS

E.O. 12958: DECL: 06/29/2015
TAGS: EINV ENRG EPET ETRD
SUBJECT: EGYPT AND ISRAEL SIGNED GAS DEAL


Classified by ECPO Counselor John Desrocher for reasons 1.4
(b) and (d).

C O N F I D E N T I A L CAIRO 004972

SIPDIS

E.O. 12958: DECL: 06/29/2015
TAGS: EINV ENRG EPET ETRD
SUBJECT: EGYPT AND ISRAEL SIGNED GAS DEAL


Classified by ECPO Counselor John Desrocher for reasons 1.4
(b) and (d).


1. (C) Israeli Infrastructure Minister Binyamin Ben Eliezer
and Egyptian Oil Minister Sameh Fahmi publicly signed June 30
in Cairo a memorandum of understanding for Egyptian gas sales
to Israel. Negotiations on this agreement have dragged out
over 10 years largely because of political concerns in Egypt.
In an effort to distance itself from the political
implications, the GOE encouraged the formation in 2000 of the
Egyptian Eastern Mediterranean Gas joint venture company,
owned by Israeli businessman Yossi Mieman's Merhav Group
(25%),Egyptian businessman Hussein Salem (65%),and the
GOE's Egyptian Gas Holding Company (10%). Having a private
company negotiate with the Israel Electric Corporation made
the arrangement more palatable for the GOE. The parties
concluded an agreement in principle in early summer 2004 and
concluded a framework agreement in February 2005. The
agreement signed today was a political understanding between
the two governments; today's signing, witnessed by Egyptian
Prime Minister Nazif, was the most high-profile public
recognition of the deal to date. A commercial agreement
laying out the precise terms remains pending.


2. (SBU) According to the agreement, an offshore pipeline
will be constructed from El Arish in Sinai up to the coast of
Israel, bypassing Gaza. Construction could begin as early as
October 2005 with Egyptian gas possibly flowing to Israel by
the second half of 2006. Under the agreement, Egypt would
provide approximately 1.7 billion cubic meters of gas per
year 15 years for a total amount of USD 2.5 billion, making
this Egypt's most lucrative gas deal ever.


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CORBIN