Arish–Ashkelon Pipeline

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Arish-Ashkelon is a non-operational natural gas pipeline.

Location

The pipeline connects the Arab Gas Pipeline with Israel. Although it is not officially a part of the Arab Gas Pipeline project, it branches off from the same pipeline in Egypt.

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Project Details

• Operator: East Mediterranean Gas Company (a conglomeration of Mediterranean Gas Pipeline Ltd, Merhav, PTT, EMI-EGI LP, Egyptian General Petroleum Corporation)
• Current capacity:
• Proposed capacity: 676.8 million cubic feet per day
• Length: 62 miles / 100 km
• Status: Mothballed
• Start Year: 2008

Background

The pipeline is built and operated by the East Mediterranean Gas Company (EMG), a joint company of Mediterranean Gas Pipeline Ltd (28%), the Israeli company Merhav (25%), PTT (25%), EMI-EGI LP (12%), and Egyptian General Petroleum Corporation (10%). The pipeline became operational in February 2008, at a cost of $180–$550 million (the exact figure is disputed). It has since ceased operation due to sabotage of its feeder pipeline in Sinai and gas shortages in Egypt. However, although originally intended for transporting gas from Egypt to Israel, the gas shortages in Egypt have raised the possibility of someday operating the pipeline in the opposite direction, i.e., from Israel to Egypt.

Initial supply agreement

Egypt and Israel had originally agreed to supply through the pipeline 1.7 billion cubic metres (60 billion cubic feet) of natural gas per year for use by the Israel Electric Corporation. This amount was later raised to 2.1 billion cubic metres (74 billion cubic feet) per year to be delivered through the year 2028. In addition, by late 2009, EMG signed contracts to supply through the pipeline an additional 2 billion cubic metres (71 billion cubic feet) per year to private electricity generators and various industrial concerns in Israel and negotiations with other potential buyers were ongoing. In 2010, the pipeline supplied approximately half of the natural gas consumed in Israel, with the other half being supplied from domestic resources. The total physical capacity of the pipeline is 9 billion cubic metres (320 billion cubic feet) per year and agreements between the two nations provide a framework for the purchase of up to 7.5 billion cubic metres (260 billion cubic feet) per year of Egyptian gas by Israeli entities, potentially making Israel one of Egypt's most important natural gas export markets. In 2010 some Egyptian activists appealed for a legal provision against governmental authorities to stop gas flow to Israel according to the obscure contract and very low price compared to the global rates, however the provision was denied by Mubarak regime for unknown reasons. In 2011, after the Egyptian revolution against Mubarak regime, many Egyptians called for stopping the gas project with Israel due to low prices. After a fifth bombing of the pipeline, flow had to be stopped for repair.

2012 cancellation

Following the removal of Hosni Mubarak as head of state, and a perceived souring of ties between the two states, the standing agreement fell into disarray. According to Mohamed Shoeb, the head of the state-owned EGAS, the "decision we took was economic and not politically motivated. We canceled the gas agreement with Israel because they have failed to meet payment deadlines in recent months". Israeli Prime Minister Benjamin Netanyahu also said that according to him the cancellation was not "something that is born out of political developments". However, Shaul Mofaz said that the cancellation was "a new low in the relations between the countries and a clear violation of the peace treaty". Eventually, gas shortages forced Egypt to cancel most of its export agreements to all countries it previously sold gas to in order to meet internal demand.

Subsequent litigation

The Egyptian state entities supplying the pipeline attempted to declare force majeure in cancelling the gas agreement with EMG and the Israel Electric Corporation, while the latter contented the cancellation amounted to a unilateral breach of contract. The matter was referred to the International Court of Arbitration of the International Chamber of Commerce in Geneva. After four years of proceedings the arbitration panel ruled against Egypt and ordered it to pay approximately US$2 billion in fines and damages to EMG and the IEC for unilaterally cancelling the contract. Egypt then appealed the panel’s decision to the Swiss courts, who also ruled against Egypt in 2017.

Reverse flow agreement

Since the Egyptian revolution, Egypt has been experiencing significant domestic shortages of natural gas, causing disruptions and financial losses to various Egyptian businesses who rely on it, as well as curtailing exports of natural gas from Egypt through the Arab Gas Pipeline (even during periods when it has been available for operation) and via LNG export terminals located in Egypt. This situation raised the possibility of using the Arish-Ashkelon Pipeline to send natural gas in the reverse mode.

In March 2015, the consortium operating Israel's Tamar gas field announced it reached an agreement, subject to regulatory approvals in both countries, for the sale of at least 5 billion cubic metres (180 billion cubic feet) of natural gas over three years through the pipeline to Dolphinus Holdings – a firm representing non-governmental, industrial and commercial consumers in Egypt. In November 2015 a preliminary agreement for the export of up to 4 billion cubic metres per annum (140 billion cubic feet per annum) of natural gas from Israel's Leviathan gas field to Dolphinus via the pipeline was also announced. The cost of converting the pipeline to allow for flow in the reverse direction is estimated at US$10 to $20 million. However, to date Egypt refuses to allow the importation of Israeli natural gas while the $2 billion fine against Egypt for cancelling the gas agreement with Israel is still outstanding.

Articles and resources

External resources

This article uses content from the Wikipedia page "Arab Gas Pipeline," under the terms of the GNU Free Documentation License.