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Egyptian Gas to Israel, Jordan May Halt for Two Weeks

Egyptian natural gas exports to Israel and Jordan may be halted for as long as two weeks after an explosion damaged a pipeline in the Sinai Desert yesterday, Egyptian Oil Minister Sameh Fahmy told state television.

The incident at El Arish in the northeastern Sinai was an act of “terror” carried out by “foreign hands,” state TV said, while the Oil Ministry said a gas leak caused the blast. It may take one to two weeks to repair the pipeline, Fahmy told state TV.

Ampal-American Israel Corp. and Merhav Group of Companies, the Israeli partners in East Mediterranean Gas Co., which operates the section to Israel, said the pipeline from El-Arish to Ashkelon is intact, and wasn’t damaged. The supply to Israel has been interrupted by a fire in a facility not related to EMG and is expected to resume within a week, Ampal said today.

The disruption to the pipeline has political and symbolic ramifications beyond the impact on fuel supplies to Egypt’s neighbors, particularly for Israel. President Hosni Mubarak’s 30-year rule has been shaken by almost two weeks of popular demonstrations, prompting questions about what political orientation a successor government might have.

Mubarak has warned that an early departure for him would leave Egypt, the first Arab country to sign a peace treaty with Israel in 1979, in chaos.

Israel’s Electricity

Israel’s Ministry of National Infrastructure said in a statement yesterday that it doesn’t foresee any interruptions to the country’s electricity supply. About 16 percent of the electricity produced by Israel Electric Corp., the country’s power monopoly, is derived from gas imported from Egypt, the company’s spokeswoman said. About 40 percent of Israel gas consumption comes from Egypt.

“Israel is prepared for such situations and has the possibility of immediately switching to alternative energy sources,” Israel’s Prime Minister Benjamin Netanyahu said at a cabinet meeting today. “Due to these advance preparations, no problems are expected in the supply of gas to the State of Israel.”

Billionaire Isaac Tshuva’s Delek Energy Systems Ltd., Ratio Oil Exploration 1992 LP and Avner Oil Exploration-LP are energy- related stocks that have found gas fields off Israeli waters. Delek Energy jumped 5.8 percent to 1,409 shekels as of 2:09 p.m. in Tel Aviv, Avner gained 4.3 percent to 2.47 shekels and Delek Group rose 4.4 percent to 871.30 shekels.

Ampal-American Israel Corp., based in Herzliya, is Israel’s biggest supplier of natural gas. Its shares dropped as much as 8.2 percent and recovered to trade 0.5 percent higher at 7.555 shekels, bringing the decline to 22 percent since Jan. 27.

Photographer: John Moore/Getty Images

An effigy of Egyptian President Hosni Mubarak hangs in a traffic intersection in Tahrir Square on Feb. 5, 2011 in Cairo. Close

An effigy of Egyptian President Hosni Mubarak hangs in a traffic intersection in Tahrir... Read More

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Photographer: John Moore/Getty Images

An effigy of Egyptian President Hosni Mubarak hangs in a traffic intersection in Tahrir Square on Feb. 5, 2011 in Cairo.

Jordan, Israel

The Sinai incident occurred on a part of the natural-gas network before it divides into branches serving Jordan and Israel, Marwan Bqaeen, head of the natural-gas unit at the Jordanian Energy Ministry, said in a telephone interview. Egyptian gas exports to Jordan may be halted for about a week, Petra news agency reported yesterday, citing Ghaleb al-Maabira, general director of Jordan’s state electricity company.

Egypt has halted gas supplies “as a safety precaution,” and Jordan has “resorted to back-up fuel,” Bqaeen said.

Egypt has natural-gas reserves of 77 trillion cubic feet (2.18 trillion cubic meters) and is the main producer of the hydrocarbon in the eastern Mediterranean, according to the U.S. Energy Department. The country exported 650 billion cubic feet of gas in 2009, 30 percent by either the Arab gas pipeline to Jordan, Syria and Lebanon, or to Israel through the El-Arish- Ashkelon line, according to the U.S. department’s figures.

The line to Israel has operated since 2008 and can supply up to 7 billion cubic meters a year, according to Israel’s Department of Natural Infrastructure. Israel imported 60 billion cubic feet of gas in 2009, U.S. Energy Department data show.

Egypt supplies Israel with gas under a 15-year contract and is likely to eventually deliver almost 1 trillion cubic feet. Israel imports about 85 percent of its energy.

Gas Reserves

Israeli National Infrastructure Minister Uzi Landau said Feb. 1 that events in Egypt should heighten concern over the supply of natural gas to Israel, and the country should move quickly to develop its own gas reserves.

The disruption in gas supplies from Egypt to Israel may result in an increase of 10 percent to 20 percent in electricity prices, Israel Electric Corp. Deputy Chief Executive Officer Moshe Bachar told Israel’s Army Radio today.

Jordan, which imports almost all its energy supplies, aims to increase imports of Egyptian gas for use in its power plants to 330 million cubic meters in 2011, from 240 million cubic meters last year, then Energy Minister Khalid Irani said in an interview on July 14.

Syria imported 679 million cubic meters from Egypt in 2010, making up about 8 percent of the country’s needs, according to government figures. The country doesn’t expect any disruption in its power supply as it can switch to alternative fuels, Al-Watan said today, citing Oil Minister Sufian Alao.

To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net; Ola Galal in Cairo at ogalal@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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