Egyptian Prime Minister Essam Sharaf has "directed the revision and review of all gas contracts Egypt agreed to with all countries, including Jordan and Israel", Egypt's official news agency MENA reported today. MENA said that the revisions could bring Egypt an extra $3-4 billion in revenue.
Since 2009, Egypt has supplied natural gas to Israel under an agreement to supply 25.5 billion cubic meters of gas over 20 years. The agreement could be worth up to $6 billion, including options to increase quantities delivered, after Egypt raised the price of gas by 40% in 2009. The agreement is an appendix to the 1979 Israel-Egypt peace treaty.
Earlier this month, Egyptian Foreign Minister Dr. Nabil el-Araby said that Article 8 of the peace treaty provides for a mechanism that allows Egypt to change the price of gas it charges Israel. The price update in 2009 set a price of $4 per million British Thermal Units, but the price of natural gas has since risen sharply in the wake of rising prices for oil and coal, which are the baseline for linking the price of gas.
Besides Israel, Egypt supplies gas to Jordan and other Arab countries. News agencies have been reporting in the past few days that Egypt will raise the price of liquefied natural gas it delivers to Spain via tankers.
Published by Globes [online], Israel business news - www.globes-online.com - on April 14, 2011
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