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Egyptian Oil Minister Tariq al-Mulla

A delegation of companies engaged in developing the Israeli Tamar natural gas field have recently met in Cairo with representatives of Egyptian private companies seeking to import Israeli gas, Egyptian media reported this week. The Egyptian companies are planning to direct the Israeli gas to the local market, as well as to Egyptian liquefaction plants for export.

The same sources pointed out that the import will be done through existing gas lines or via new lines, to be decided in the negotiations.

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But, according to reports, Egyptian Oil Minister Tariq al-Mulla has told Israeli Energy Minister Yuval Steinitz (Likud) he would be reluctant to lift his government’s freeze on Israeli gas imports before the matter of a $2 billion fine awarded by a Swiss court to Israel is “settled.”

In May, the Swiss court rejected an appeal by Egyptian Natural Gas and Egyptian General Petroleum Corporation after a French court in 2016 had ordered them to pay the $2 billion in compensation to the Israel Electric Company and Energy & Minerals Group (EMG) for losses they had sustained when then Egyptian President Mohamed Morsi cut off supplies of natural gas to Israel in 2012.

Meanwhile, an interview al-Mulla gave to Bloomberg in November damaged the value of Israeli gas companies’ shares, on speculation that Egypt would halt the talks on buying natural gas from Israel, unless it gives up those $2 billion as the cost of doing business with Arab regimes.

The partners in Israel’s offshore sites see Egypt as the best potential market for their natural gas because of the relatively low cost of delivery and because the Egyptian market is starved for gas. So Texas-based Noble Energy Inc. and Israel’s Delek Group, the biggest stake holders in the Israeli gas pool, will have to lean hard on Minister Steinitz about giving up those two billions.

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