Egypt can now breathe easier having reached an agreement to pay Israel $500 million in a marathon dispute overseen by the International Chamber of Commerce. The North African nation had initially been asked to pay Israel $1.8 billion in compensation, following the collapse of natural gas exportation deal in 2012, caused by rampaging jihadists in the Sinai Peninsula.
Egypt appealed and kick-started talks on a possible settlement. With this agreement, Egypt will pay the fine over eight and a half years. Consequently, Israel Electric will drop all claims at ICC. The settlement will begin with the down payment of $60 million and a payment of $40 million after six months from the agreement’s activation date. Subsequently, the rest will be paid in semiannual instalments of $25 million. These payments will be guaranteed by credit letters from the National Bank of Egypt, as provided by law.
The Egyptian General Petroleum Corporation (EGPC) and Egyptian Natural Gas (EGAS) confirmed the deal in a statement after Egypt co-signed with Israel Electric Corporation. Though it bugs the mind why Israel would agree to forgive Egypt over $1.2 billion, many in the Egyptian government will accept the victory. It may also be embraced as a justifiable reward for all the energy this administration has invested in foreign relations since President Abdel Fattah el-Sisi took power.
Some of those clever foreign policies have seen major deals struck in Asia with the Japanese and Chinese governments, as well as in Europe with Cyprus, to whom Egypt exports some of its processed gas. Only yesterday, Egypt began exploration talks with Lebanon. Two weeks ago, an Israeli company began pumping natural gas from the Tamar gas field in the Mediterranean Sea to Egypt on a 90km-long pipeline, becoming an official gas transfer channel between both countries, expected to start transportation on the last day of June. In early 2018, a three-party agreement between Israel’s Delek Drilling, US-based Noble Energy, and Egypt’s Dolphinus Holdings, contracted Israel to export 64 billion cubic meters of natural gas through 2028 to Egypt.
Beyond contributing seventy percent of Egypt’s electricity, natural gas also represents Egypt’s most urgent claim to being an attractive economic partner to any country in the world interested in gas exploration. Since 2015, it has tripled its oil and gas production, transforming from an importer to a self-sufficient exporter in quick time. Egypt is Africa’s third largest gas producer, behind Algeria and Nigeria.
By Caleb Ajinomoh