CAIRO
- The difference in reactions to the proceeds of the gas agreement concluded between Egypt, Israel and the European Union raises questions about the extent to which Egypt benefits from the deal, and is it an opportunity for it in its quest to become a regional energy center?
And what are its logistical capabilities to turn into a crossing for Israeli gas to Europe?
The agreement was signed last Wednesday in Cairo, and it extends for 3 years, automatically renewable for two years, and provides for the transfer of natural gas from Israel to liquefaction stations in Egypt (Idku and Damietta in the north), and then shipped north to the European market.
While the parties to the agreement did not announce the value of the deal, which is expected to compensate about 10% of Russian gas to Europe, the European Union announced that it would support the Egyptian economy with 100 million euros;
To overcome the negative effects of the Ukrainian war.
The agreement comes at a time when the gas sector has become a fertile field for consolidating Egyptian-Israeli relations, since the announcement of the huge discoveries of natural gas in the eastern Mediterranean.
There is a background related to the tripartite gas agreement dating back to 2018, when an agreement was signed to export natural gas from the Israeli offshore Tamar and Leviathan fields to a private Egyptian company, in an incident that Israel described as “the most important agreement since the signing of the peace treaty in 1979,” about which - at the time - the president said Egyptian Abdel Fattah El-Sisi said, "Egypt has scored a goal."
In 2019, Cairo reached an amicable agreement with Tel Aviv to pay $500 million in compensation to Israel, within the framework of international arbitration that took place after the collapse of the Egyptian gas export agreement to Israel in the wake of the January 2011 revolution.
While Israeli Prime Minister Naftali Bennett said that the tripartite agreement is "historic", and enhances his country's economy and makes it a key player in the energy market, Al Jazeera Net seeks to answer questions about Egypt's gains from this deal, especially since Cairo has turned from a gas supplier into a gas importer from Israel in a few years.
Why does Israel export gas through Egypt, and not directly to Europe?
Economist Abdul Nabi Abdul Muttalib explains this by pointing out that Israel does not have the infrastructure required to export gas directly to Europe, whether through Syria-Turkey, or through Cyprus-Turkey.
Therefore - according to Abdul Muttalib's speech to Al Jazeera Net - Israel had no solution other than Egypt and the use of the East Mediterranean gas pipeline that has existed since the deal to export Egyptian gas to Israel.
Who is winning in the gas market?
And why?
While the terms of the agreement signed for the transit of Israeli gas to Europe after its liquefaction in Egypt are still ambiguous, observers agreed that Tel Aviv is the biggest winner from it, and there remains an exaggeration in what was raised about the gains of Egypt and the European Union from them.
Proceeding from the ambiguity of the agreement to determine who will benefit from it, Abdul Muttalib believes that the answer to this question needs to know the terms in full, and the terms of the agreement, and to know that, one must search for an answer to these questions:
Are the transaction returns to Cairo determined as a partner?
Or just a commission in its capacity as a mediator and transit point for transporting Israeli gas to Europe?
Will Egypt import gas from Tel Aviv, then re-manufacture and liquefy it, then sell it as a product of Egyptian origin, and later get the full value of its exports after deducting the value of the imported Israeli gas?
Or will Egypt export liquefied gas in Egyptian liquefaction stations, whether Egyptian or Israeli?
As for the expert in the oil and gas industry and maritime transport, Ibrahim Fahmy, in his talk to Al Jazeera Net about identifying the beneficiary of the agreement, he points out that:
In light of the talk that the deal will compensate about 10% of Russian gas to Europe, and after the doubling of gas prices globally, it will not be less than 50 billion dollars annually.
Without going into the impact of the agreement and its danger on the principles of Egyptian national security, and with a purely pragmatic view, does Europe have the funds to pay the real and just price of the deal?
Will Egypt get half the value of the deal?
It is the fair value of a country whose geographical position and infrastructure are the basis of the agreement, in addition to the fact that this gas is essentially its property, but the demarcation of the maritime borders (in recent years) had a different opinion.
Accordingly, Fahmy doubts Egypt's benefit from the agreement, pointing out that Egypt has given up a valuable opportunity to become one of the major countries in the field of energy and gas.
He added that Egypt's production of gas from the Zohr field (discovered in 2015 by the Italian company Eni in the eastern Mediterranean), was supposed to be the main source that supplies gas to the liquefaction plants in Damietta and Idku, and from there to Europe, but it was replaced by a gas export agreement. From Israel to Egypt last year, followed by an export agreement to Europe.
On the other hand, the former Minister of Petroleum and Mineral Resources Osama Kamal expected that the agreement would bring economic and political benefits to Egypt, explaining - in press statements - that it would support benefiting from the liquefaction of gas exported from neighboring countries through liquefaction stations that the state shares ownership of, in addition to transit fees through the network. National Gas.
It also achieved - according to Kamal - a good political position through an influential role between some parties in the eastern Mediterranean, which may witness disputes that may be related to gas, such as the current dispute over a concession area between Lebanon and Israel.
Do gas agreements support Egypt's efforts to become a regional energy center?
In recent years, Egypt has been seeking to become a regional energy center by exporting its surplus natural gas production, in addition to exporting the surplus of gas to neighboring countries, through the two liquefaction stations located on the Mediterranean coast in Idku and Damietta.
In this regard, Abdel Muttalib expects the agreement to help attract more investments in the sectors of gas transport and liquefaction and port revitalization, which may lead to maximizing Egypt's role as a major regional center in the field of energy.
He stressed that all cooperation agreements contribute to reviving the Egyptian economy, pointing out that Egypt received 100 million euros in aid once the tripartite agreement was signed.
On the other hand, Fahmy rules this out, saying that over the past decade, the Egyptian regime did not improve the reading of reality and foreseeing the future of energy, and did not make proper planning for the use of the resources owned by his country, especially the huge gas reserves in the deep offshore fields in the Mediterranean, which are in the waters. Economic North Egypt (East Mediterranean Gas).
Fahmy held the Egyptian regime responsible for demarcating the maritime borders with neighboring countries, in a manner that does not serve the higher interest of the state, future generations and national security, noting that the regime lost the country's full ownership of the world's largest offshore gas fields that were newly discovered and have proven reserves, and it was supposed To move Egypt into an international center of gravity for the production and export of gas.
He also saw that a huge and easy opportunity to seize was lost on the Egyptian economy, to be the owner of a “significant” share of the alternatives to the share of Russian gas for Europe, and an annual income estimated at tens of billions of dollars.
Are there negative repercussions on Egypt?
Abdul Muttalib believes that his country has achieved a great gain in the gas file by signing these agreements, but added, "I fear that this may be at the expense of the Arab national cause and at the expense of Egypt's historical position in the region," referring to what is being raised about the ownership of Palestine. The fields from which Israel extracts gas.
He explained that the goal is to market Israeli gas in the first place, but he warned that the flow of Israeli gas to Egypt might eliminate the competitiveness of exploration and exploration for more gas fields in Egypt.
Despite this, it is certain - according to Abdel Muttalib - that there are real gains for the Egyptian economy, even if the liquefaction plant in Damietta is 100% managed by the Italian company Eni, indicating that this is not new to the gas and oil sector worldwide.
What are the dimensions of the tripartite agreement regionally and internationally?
Of the repercussions of the Ukrainian war on the gas market, Fahmy points out that:
Western talk that dispensing with Russian gas deals a blow that the Russian economy cannot bear is an incorrect premise.
Therefore, replacing Russian gas with multiple alternatives - including the eastern Mediterranean - will not be easy.
There is a danger to the stability of energy markets and the doubling of gas and oil prices for long periods that the global economy will not bear, which will be hit by inflationary waves as a result of this trend and miscalculations.
As a result of the conflict of interests between the major players in the Middle East, it was not possible to move forward in making eastern Mediterranean gas an available, logical and cheap alternative to the entire Russian share of Europe, by extending direct gas lines from the production fields to Europe via Cyprus or Turkey.
The element of time, which puts pressure on everyone, pushed for partial solutions, by compensating only 10% of the Russian gas share.