Zionist Media: Arrant criminal compacency

NOVANEWS

 

TheMarker has warned time and again that the Israeli economy cannot rely solely on Egyptian gas.

By Avi Bar-Eli

1 This is just the beginning. Saturday’s fire at a metering station on the pipeline in North Sinai wasn’t the first time the supply of natural gas from Egypt to Israel was halted, nor will it be the last. But the previous interruptions were due to technical glitches or to strategic or business considerations. While a technical problem might have been behind the explosion and subsequent fire, it might also have been caused by the disintegration of Egyptian sovereignty, which could open the door to sabotage of its most sensitive systems.

The warning lights have been blinking since the supply breakdown in 2008, culminating in the opposition’s recent calls to halt delivery to Israel. This wasn’t just another warning sign. This was the first chapter of a disaster waiting to happen.

East Mediterranean Gas Company is the firm that buys the gas from the Egyptian government and sells it to Israel. The majority of its shares are owned by Egyptians; Israeli businessman Yossi Maiman has a minority stake. EMG is identified with the Mubarak regime. Its senior partner, Hussain Salem, who owns 28% of EMG and who fled Egypt for Geneva as the rioting turned ugly, is a close crony of President Hosni Mubarak. The other partners in the company are Egypt Natural Gas Co., Thailand’s PTT, Ampal American Israel Corporation and American businessman Sam Zell.

EMG’s facilities in Egypt are guarded by Egyptian forces; the fall of the government would affect the orders handed down in the field. Sabotage could be a convenient way to end the sensitive venture with Israel, without anybody in government having to take responsibility for acting to hurt Israeli, U.S. or Thai interests.

The extreme scenario of the Muslim Brotherhood rising to power could, of course, end the EMG-Israel story without the need to look for excuses.

 

2 Playing with fire. The above scenarios may seem extreme, but cannot be ignored. A significant percentage of Israel’s electrical production depends on Egyptian natural gas – a shaky foundation. When a further deterioration in Mubarak’s health was reported in the global media, TheMarker warned that Israel’s leadership was not giving enough thought to the risk of relying so heavily on a single Egyptian source of gas in light of the inevitable regime change.

Meanwhile, some weeks later the National Infrastructure Ministry went against its own principles and agreed to allow the companies developing the Tamar offshore natural gas field to transport the gas to Ashdod and Ashkelon, after a plan to bring it to a site in northern Israel drew fierce opposition. Later the Sheshinski Committee also folded, giving the Tamar partners extraordinarily generous tax breaks so they could obtain bank loans to continue development.

The Tethys Sea field off the Ashkelon coast is expected to be depleted in about 2014, by which time Tamar should kick in. The aim of the above steps was to make sure of that – but not with the intention of possibly replacing Egypt as a source of gas. The government continued to ignore the strategic problem of increasing the supply of energy to Israel and diversifying its sources. Throughout the government assumed that the supply of gas from Egypt would continue, so all that needed to be done was to replace Tethys Sea with Tamar.

 

3 Decisions were not executed. The failure to recognize a huge potential problem was not the only eclipse of horse sense. Three years ago Jerusalem decided to publish an international tender for the construction and long-term operation of a terminal to receive liquefied natural gas, converting it back into gaseous form for supply to Israel. Then-National Infrastructure Minister Benjamin Ben-Eliezer said he didn’t think the gas supply from Egypt would be compromised, but wanted to insure that Israel could bring in LNG from elsewhere.

Come 2009, gas was found in Israeli territorial waters (Dalit and Tamar ), and the plan to build an LNG reception terminal went nowhere. Whether or not the neglect was a nod to the gas companies, it is arrant criminal complacency at the expense of Israel’s energy security.

Likewise, the National Infrastructure Ministry never ordered Delek and Noble Energy to stop fooling around and immediately start production from the Or and Noa offshore fields, which are estimated to contain between 7 billion and 8 billion cubic meters of natural gas. National Infrastructure Minister Uzi Landau has been thundering apocalyptic warnings about Israel running short of gas in two years, without cracking the whip on Delek and Noble.

 

4 The Tamar spin was refuted. The best part of this entire fiasco is watching the people who had heatedly argued to exempt Tamar from the Sheshinski recommendations wriggle. The day is fast approaching that the threat of “Arab gas” will disappear. There will be no “discrimination” against Israeli gas. The arguments against raising the state’s royalties because of the way EMG is treated are already being proved hollow.

Because of the government’s shortsightedness, nobody has considered what will happen if Tamar becomes a monopoly as a gas supplier. Nobody has given thought to control of the undersea transportation infrastructure. The Antitrust Authority has not considered the issue of future gas prices.

TheMarker has warned time and again that the Israeli economy cannot rely solely on Egyptian gas. In any case the quota of gas Egypt was prepared to sell to Israel, 7 billion cubic meters a year, is close to being reached. If the gas from Egypt stops flowing, the Tamar partners will return their investment sooner than expected by the Sheshinski Committee. They will have a monopoly over the gas supply to Israel, and the public will have to subsidize the extraordinary breaks given to them.