Israel's Natural Gas Grid. Completely Supplied by Egypt. Cheaper than LNG, less polluting than oil, and sold in Israel for at least $12 per Million BTU, compared to a buying price from Egypt of $3, Egyptian gas affords a margin of 60% to Israeli grid company ... a sweetheart deal of unbelievable proportion.
Yael Gruntman: Feb 10 11:43
Israel Electric Corporation (IEC) (TASE: ELEC.B22) has notified Egypt's East Mediterranean Gas Co. (EMG) that it has received all of the required approvals for the coming into force of the amendment to their gas sale agreement, EMG shareholder Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) announced today. The companies signed the amendment on September 17, 2009,.
EMG has contracted to supply to IEC 42 billion cubic meters of natural gas for a total value of about $6 billion.
El-Arish Gas Compression Station
This means that Egypt sells the gas to Israel at a. price of $140 per 1000 cubic meters. I can only compare Egypt gas price sales to Russian gas prices to Europe. According to New York Times (http://www.nytimes.com/2009/05/16/world/europe/16gazprom.html), Gazprom sells gas to Eastern Europe at a price of $340 per 1000 cubic meters throughout 2009. The price reflects a complex formula that is based on oil prices. Ukraine (a country that Russia is keen on courting before its elections) gets Russian gas at $230 per 1000 cubic meters. While the average country-to-country gas prices in Europe were $280 per 1000 cubic meters. These prices reflect 20-year contracts so they are based on long-term contracts in the same way that Egypt-Israel gas prices are based on.
This means that after a 40% escalation in Egyptian gas prices, it is still 40-50% below Russian gas price that is being sold to Ukraine, a country that Russia wants to court. This still opens a lot of questions in my mind about the sale of Egyptian long-term assets at discounted prices and what the political favors are that Egypt is courting Israel for,
Why?
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