Israel may be considering its energy options after a pipeline bringing gas from Egypt suffered four attacks in the space of five months.
This link provides Israel with 40 per cent of its gas and the most recent explosion, which took place at a monitoring station near the Egyptian town of Al-Arish, was the second incident in as many weeks.
Gasco, the Egyptian company which operates the pipeline, shut it down after the explosion last Monday. An official from the company told Al-Mesryoon, the Egyptian daily, that the latest attack “resulted in substantial material damage” with no timetable for repair. The pipeline continues to Jordan but Israel is thought to be the target of the act of sabotage.
Last year, four Israeli firms signed 20-year contracts worth up to $10bn to import Egyptian gas, but post-Mubarak Egypt no longer represents a reliable supplier. The attacks have all taken place following the fall of the old regime and there is little guarantee that the pipeline will be secure under a future Egyptian government.
“This was an anchor, perhaps the most important element of our peace agreement with Egypt from an economic perspective, and it is slowly, slowly eroding,” said Uzi Landau, Israel’s minister for infrastructure to a national radio station.
Gas imported from Egypt represents a relatively inexpensive way for Israel to generate electricity. Since the shutdowns, Israel has relied upon on diesel and oil-fired plants to deal with peak demand. Israel Electric Corp, the main electricity supplier, estimates that it will need over $1 billion to buy enough diesel to replace the shortfall caused by disruptions. Landau predicted that electricity prices would rise 20 per cent as a result.
East Mediterranean Gas Company, the Cairo-based business that delivers gas to Israel, has threatened to sue the Egyptian government up to $8 billion worth of damages for the disruption.
In the longer term, Israel may choose to end its dependence on Egypt altogether. Two recent offshore gas discoveries, at Tamar and Leviathan, are expected to be operational by 2014 and 2017 respectively. They will produce enough gas to meet Israel’s domestic needs for decades.