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Africa Economic Institute

Egypt Discovers 100 billion cubic square of Natural Gas


The petroleum authorities discovered 100 billion cubic squares of natural gas in the Azhar gas field that is located in the Delta region. The 100 billion cubic meters that were discovered translates to an equivalent of around 16 million barrels of oil.

The petroleum authorities discovered 100 billion cubic squares of natural gas in the Azhar gas field that is located in the Delta region. The 100 billion cubic meters that were discovered translates to an equivalent of around 16 million barrels of oil.

According to Al-Ahram newspaper, this discovery by Dana Gas was announced right after natural gas was discovered in neighboring Al-Manzala gas field. The managing director of excavations, Ahmad El-Arbid, stated that this discovery is the fifth of its kind by Dana Gas. The gas field is located 10 km from the refineries, which allows for faster processing and production.

Hany El-Sharkawy, the regional manager of Dana Gas, announced that extraction is currently taking place. More fields will be dug for evaluation purposes where they will all be connected with a common pipeline. Production, however, will begin by  mid-2009.

The discovery came at a time when Egypt is renegotiating the increase in gas prices with Israel. On Sunday, the government of Egypt signed a new contract with the East Mediterranean Gas Co. (EMG) that dictates the increase in exported gas prices to Israel due to the general increase in global standardized prices.

The previously ratified contract that was signed in 2000 allowed Israel to get gas at very low prices, even when compared to global standardized prices at the time. The common Israeli citizen is the one that will bear this burden of increase in prices. However, Israel’s electricity company has accrued benefits up to $2.75 per unit of gas up until prices were modified.

Negotiations between the Egyptian government and the East Mediterranean Gas Co. started to take place last October, when Egypt announced its intentions of increasing its gas prices with the rest of the world, including Spain and France, due to the global increase in the standard price of gas in the past few years.

Despite this logical move by Egypt, critics emphasize on political motives behind this action. They claim that Egypt had agreed on supplying gas to Israel in 2000 at a price of $2.75 per unit, even though the global standard price was $8 per unit. The rising opposition in Egypt that calls for banning oil and gas exports to Israel, especially after the recent siege on Gaza, has led others to believe that this was the original motive behind Egypt’s actions.

According to the newly-signed contract, a special committee will be formed to reevaluate prices in case any further variations in international standard prices take place.

According to the peace treaty that was signed by the two countries, Egypt is obliged to export oil and gas to Israel at internationally recognized prices.

Source: Africaecon.org
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Source: www.africaecon.org