Exclusive: Egypt’s gas contracts with Israel at stake as Mubarak seeks to cool peace relations

debkafile‘s Middle East sources report that scholars at Cairo’s al Azhar University, which is under tight government control, have issued an edict barring the sale of Egyptian oil and gas to “the Zionist enemy” as a betrayal of Islam. Ministers and lawmakers from all of Egypt’s parties are for the first time raising questions about the 15-year gas contract signed in 2005.
Our Cairo sources affirm that none of them would have ventured to question fuel sales to Israel without President Hosni Mubarak’s nod.
The contract worth $2.6 million covers the sale of 1.7 cu. m of liquefied natural gas per year for 15 years to the Israeli Electricity Company at $1.5/million British thermal units (Btu). A 100-km undersea pipeline was built to carry the gas from El Arish in northern Sinai to Israel’s Ashkelon port.
It did not start flowing last month as scheduled because the pipeline was said to be technically unfit.
In the 30 years in which Egypt has exported fuel to Israel as part of their peace relations – incepted by Anwar Sadat and endorsed by Mubarak – these transactions was out of bounds to political criticism in Egypt as a key strategic element of the relationship.
Two government ministers have now come out against the gas deals, Prof. Moufid Shehab, minister of legal and parliamentary affairs and a respected legal authority, who in the 1980s arbitrated a dispute between the two countries over the disposition of the Taba enclave. He argues the price Israel is paying is too low and does not even cover production and transport coasts.
The minister of Petroleum Sameh Fahmi says the sale should be treated as a straight business deal, because it was contracted between Egypt’s East Mediterranean Gas, which has an Israeli partner, Yossi Maimon, and the Israeli Electricity Co. and is therefore of no concern to the government – despite the fact that it was negotiated with President Mubarak.
Our Middle East sources disclose here that the president is finding it politic to cool Cairo’s relations with Jerusalem, because he is in the process of patching up the quarrel between the Palestinian Hamas and Fatah to establish a unity government and hopes to convince Washington to accept it.
Our sources Middle East say that pricing as well as political expediency is a factor in the controversy. Egyptian ministers are urging the renegotiation of the contract which fixed the price of gas sold to Israel far too low when the market rate has since soared many times over.