Bang goes the Egyptian gas line once again


Gas pipeline blast

Egyptian gas pipeline blast

Here we go again. Mysterious “Gunmen” blew up Egypt’s gas pipeline to Israel for the fourth time.

Masked gunmen blew up a terminal of the Egyptian natural gas pipeline to Israel and Jordan in a predawn attack Tuesday, security officials said.

The officials said the attack was carried out by at least four assailants. The terminal is located in the city of El-Arish in the northern part of Egypt’s Sinai Peninsula, about 30 miles (50 kilometers) west of the Israeli border.

It was the second attack on the pipeline in as many weeks and the fourth since an 18-day uprising toppled President Hosni Mubarak’s regime on Feb. 11.

No one claimed responsibility for Tuesday’s explosion but disgruntled Bedouin tribesmen in the area have been blamed for attacking the pipeline in the past. Islamists opposed to Egypt’s 1979 peace treaty with Israel have also been suspected.

The instability of Egypt’s gas supply to Israel has, of course, direct economic implications for Israel

“The most important economic connection between Israel and Egypt is eroding,” [Infrastructures Minister] Landau said. “Electricity disruptions are not expected since we have other energy reserves, however it will be more expensive.”

“The price will increase by about 20 percent due to the use of gasoline and diesel, but my job is to maintain the supply of electricity to the Israeli economy,” Landau continued.

“Israel was ready to allow Egypt to deploy more forces in Sinai to secure the pipeline, even at the beginning of the Egyptian uprising, in opposition to the peace agreement,” he explained. “But I recommend against interfering since our neighboring country’s situation is not simple. Israel needs to rely on herself and the Tamar reserves can supply [gas] needs for the next 25 years.”

Egypt itself is also suffering economically from these gas line blasts, and its financial reputation is being eroded.

International shareholders in East Mediterranean Gas Co (EMG) pushed ahead with legal claims against Egypt for $8 billion in damages from contract violations in gas supplies, a company official said.

Novik said the Egyptian government’s failure to deliver contractual quantities has already caused Egypt a loss of nearly $500 million as well as serious problems to the Israeli energy market, which gets about 40 percent of its gas from EMG.

The disruptions have also undermined Egypt’s reputation as a reliable supplier and caused serious financial losses to EMG, Novik said.

The Guardian relates one theory that Bedouin tribesmen might be involved in the sabotage:

Although no group has yet claimed responsibility, Monday’s attack also underscored the ongoing tension between the Cairo-based government and Egypt’s Bedouin communities, who have complained of state-sponsored discrimination against them ever since Egypt reclaimed the Sinai peninsula from Israel in 1982. Activists claim that an official effort to “Egyptianise” northern Sinai through the resettlement of Nile valley dwellers on the peninsula has locked Bedouins out of jobs and housing opportunities and destroyed traditional ways of life.

“There’s been a long-standing conflict simmering between Bedouin communities and the Egyptian state,” said Elijah Zarwan, senior north Africa analyst for the conflict resolution NGO International Crisis Group. “The Bedouin now are looking to make sure that they aren’t left out of the kind of sweeping changes that many Egyptians across the country are hoping to see in the aftermath of Mubarak’s fall. They don’t want to be left behind.”

This sounds like extortion to me, enforced with gas pipeline sabotage.

The article also carries a defiantly positive outlook for Egypt’s gas revenues:

But experts suggested that the long-term economic impact on Egypt would not be too great. “It will certainly have a short-term effect on the balance of payments, because the government is now not going to get the gas revenues they had been expecting from Israel and Jordan,” said Simon Kitchen, a strategist at Egyptian investment bank EFG-Hermes.

But he pointed out that last year gas exports to Israel and Jordan through the pipeline totalled only 5.46bn cubic metres, a figure dwarfed by the almost 10bn cubic metres of liquefied natural gas that Egypt exported via tankers to Europe and elsewhere. “Israel and Jordan, especially the latter, rely on this gas heavily,” added Kitchen. “For Egypt the money is nice, but it’s not absolutely critical.”

Given this hostile and unstable environment in Egypt, Israel’s natural gas finds can’t be developed quickly enough.

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2 Responses to Bang goes the Egyptian gas line once again

  1. Earl says:

    Assuming that Spengler is correct, Egypt will be facing state insolvency and widespread famine by the fall. Interesting times, and all that..

  2. Pingback: Latest #BDSFails | Anne's Opinions

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