Israel Sees First Worrying Sign of New Mideast-Cut Gas Supplies
Israel's energy industry looks like it's on its way to becoming the country's first casualty of the emerging new Middle East, where governments are responding to public pressure for an end to secret deals and taking a harder line on the Jewish state.
More than a month after militants attacked a key pipeline in Egypt's Sinai Desert, the flow of natural gas to Israel has yet to be resumed. In Israel, industry officials and experts now admit that the shutdown isn't due to technical problems but the changing political environment in Egypt since Husni Mubarak was forced to step down last month.
Ampal-American Israel Corp., which owns a 12.5% interest in the pipeline running from Egypt's Al-Arish to the Israeli port city of Ashkelon, said last Thursday [March 3] that repair work on the pipeline was complete, but that final testing has been delayed. After promising repeatedly over the last month that supplies would be resumed shortly, Ampal conceded it could no longer offer any assurances.
"In the short term, there will probably be a renewal of gas deliveries, but in the long term, it's going to be a big problem. I don't think Egypt will be a reliable source for Israel," Brenda Shaffer, an energy expert at the School of Political Science of Israel's University of Haifa, told The Media Line.
The gas crisis has major economic and political implications for Israel. Over the last several years, the country has made a rapid switch from oil and coal to natural gas for electric power, and it was counting on Egypt as a major source of energy. But just as critically, the cutoff may also signal cooling political ties with Egypt, which Israel has seen as a key regional ally.
The two countries signed a gas accord in 2005 under which Israel agreed to import 1.7 billion cubic meters (60 billion cubic feet) of Egyptian gas annually. Since then, Israel has found increasingly large quantities of its own gas off its Mediterranean coast, but the government encouraged imports to create competition in the gas market and as a stopgap until domestic supplies can come on stream.
Until last month, pipeline operator East Mediterranean Gas (EMG) supplied 45% of the energy needs used by Israel Electric Corporation (IEC), the country's government-owned power monopoly. Without the gas, IEC has been forced to burn coal and diesel fuel at a cost of about US $1.5 million more a day.
Higher costs and increased air pollution aside, Israel can manage for now, analysts said. But if Egyptian supplies don't resume by the summer, when electricity demand peaks as Israeli switch on their air conditioners, the country could face a power shortage. The only solution will be to relax environmental regulations, said an industry source who asked not to be identified. He said Israel will only be able to breathe easier when its next big field, Tamar, begins to pump gas sometime in 2013.
The gas deal with Israel faces a further problem because it is secret. No one knows the price Israel pays or other key terms, but industry sources suspect it is probably low by global standards and less than Egypt's other neighbors (Jordan, Syria and Lebanon) are paying for their imported Egyptian gas. Even when Mubarak was in power, the matter of the price was fuel for lawsuits and opposition grievances in Egypt.
(Excerpts by David Rosenberg, The Media Line, March 7, 2011)
Prayer Focus
Pray that plans for the Tamar gas find will progress rapidly and successfully so that Israel does not need to be dependent on an unstable Egypt.
Scripture
"The LORD will command the blessing on you in your storehouses and in all to which you set your hand, and He will bless you in the land which the LORD your God is giving you…if you keep the commandments of the LORD your God and walk in His ways" (Deuteronomy 28:8-9).
portions taken from Bridges for Peace newsletter
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