Delek Drilling LP, an Israeli energy explorer controlled by billionaire Yitzhak Tshuva, is considering buying a stake in an Egyptian liquefied natural gas (LNG) plant, Bloomberg reported yesterday.
The financial agency noted that Delek’s move was an effort to “broaden its export footprint”.
“Acquiring a piece of either the Idku or Damietta facilities, operated by Royal Dutch Shell Plc and Spain’s Union Fenosa SA, respectively, is among the various routes possible for the Egyptian deal,” Delek said in its annual report.
Other options, the company’s report explained, would be “to buy a capacity at the plants rather than equity stakes,” or “acquire their [Egyptian plants’] gas liquefaction services.”
The Israeli company pointed out that the deal would serve as ‘the strongest signal yet that Israel and Egypt are moving beyond security cooperation and toward deeper economic ties.’
The Egyptian petroleum ministry is yet to comment on the announcement.
With Delek becoming a partial owner of one of the Egyptian gas sites – both have been largely idle since 2014 after Egypt halted exports in order to cope with domestic energy shortages – it would be able to sell the plants’ output to markets beyond its immediate region.
“While plans are afoot to sell gas via pipelines to Egypt and Jordan, Delek also wants to ship gas to far-off markets, for which it would need the LNG facilities,” the Tel Aviv-based company added.
In mid-January, Israeli energy minister, Yuval Steinitz, said that his country would export seven billion cubic metres of gas annually to Egypt over a period of ten years. The agreement sparked a wave of anger by Egyptian politicians and activists who accused the government of “normalising relations with Israel”.
In February 2018, Egyptian President Abdel Fattah Al-Sisi signed a $15 billion gas import agreement with Israel, after which Israeli and Egyptian companies bought a 39 per cent stake in the Eastern Mediterranean pipeline to pave the way for such a deal.
Under the deal, Israeli offshore gas fields, Tamar and Lothian, will supply the Egyptian private sector company Dolphin Holdings with about 64 billion cubic metres of gas for ten years.
Egypt used to sell gas to Israel – albeit below market rates – but the agreement collapsed in 2012 after repeated attacks on the pipeline in the Sinai Peninsula.