Sales strategies

The government launched a spirited defence of its position over gas exports to Israel, reports Gamal Essam El-Din

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The long-term controversy over sales of natural gas to Israel spilled over into a stormy parliamentary session on Monday as the government faced opposition accusations that it was selling gas to Israel without obtaining the prior approval of parliament, that it gave businessman Hussein Salem a monopoly over sales of Egyptian gas to Israel, that it allowed the gas to be sold at a discount and had kept supplies flowing during Israel's attack against Gaza during December and January. Some opposition MPs also claimed that Israeli tanks were fuelled by Egyptian gas during the Gaza campaign.

Minister of Petroleum Sameh Fahmi denied allegations that the government had been involved in selling any gas to Israel since 2005. "The fact is that a private joint-stock company was established under the investment law and it obtained a concession to export gas to East Mediterranean countries," he told MPs. "We can't ask this company to sell gas to some countries and not to others."

Fahmi went on to tell parliament that the strategy governing gas exports was developed in 1993/1994 as part of a comprehensive drive to raise foreign currency revenues.

"At the time," said Fahmi, "the government took two strategic decisions: it stopped exporting oil because of declining reserves and began exporting gas in 2000 to improve the trade balance and compensate for the revenue lost from oil sales."

The government, he continued, had been doing its best since 2000 to make Egypt an energy hub for the Euro-Mediterranean region. "We deliberately diversified export markets for gas sales in both Europe and the Arab World," said Fahmi. Egypt and the European Union agreed to a network of pipelines to Euro-Mediterranean markets, one linking Egypt with Jordan, Syria, Lebanon, Turkey and then to Europe, a second linking Egypt with Israel, Palestine, Lebanon, Turkey and then Eastern and Central Europe. Within this framework Egypt signed two memorandums of understanding, with Israel and the Palestinian Authority, allowing the pipelines to be built in return for sales of Egyptian gas.

Natural gas, said Fahmi, cannot be used as fuel for tanks.

"I am sorry to note that the MPs who raised this issue are completely unaware of the chemical aspects of natural gas." He added that, "Egyptian gas is being used in Israel to generate electricity and not to provide tanks with fuel."

Fahmi also denied that Egypt is selling gas to Israel at a discount.

"Let me again emphasise that the government is not selling gas to Israel," he told MPs. What the government is doing now is "negotiating with the Eastern Mediterranean Gas Company [EMG] and other Spanish and French partners to raise the price of our gas sales to them".

Fahmi refused to report the price Israel is paying for Egyptian natural gas imports. "There is no fixed price but foreign gas exportation companies in Egypt agreed that the price should be adjusted to reach between $2.5 and $2.65 per million British thermal units.

Minister of State for Legal and Parliamentary Affairs Moufid Shehab indicated that under the 1979 Egyptian-Israeli peace treaty, endorsed by the People's Assembly on 10 April, 1979, Israel has the right to submit tenders to buy gas. Shehab also pointed out that on 2 February the Supreme Administrative Court overturned a November judicial ruling nullifying the gas export deal between Israel and Egypt on the grounds that it had not been submitted for parliamentary approval. "So we have an international treaty and a final court ruling and all emphasise the legality of gas being sold to Israel," said Shehab.

The accusations were contained in interpellations submitted by three opposition MPs. Muslim Brotherhood MP Hamdi Hassan claimed that the government was complicit with Israel in imposing a siege on Gaza and, as a consequence, the killing of Palestinians in the Strip.

"We all saw how Israel and America praised the efforts of President Hosni Mubarak in keeping Hamas under siege, tightly controlling the borders with Gaza during the war and keeping the Rafah crossing closed to Palestinians seeking to escape Israel's barbarous attacks." Hassan further alleged that the government buys gas from foreign companies at $3 per million British thermal units and sells it to Israel at just 75 cents.

"This means a loss of LE55 million per day for Egypt or LE1.5 billion per month and LE18 billion per year."

Hassan accused former prime minister Atef Ebeid of awarding Hussein Salem, the businessman who owns a majority of shares in the Israeli- Egyptian consortium of Eastern Mediterranean Gas Company, the right to monopolise gas sales even before the company had been legally established. "What else was it apart from corruption and favouritism to award one businessman a monopoly on gas exports to Israel without even requiring him to submit a tender?"

Wafdist MP Mohamed Abdel-Alim focussed on what he claimed was the government's violation of Article 151 of the constitution which states that strategic agreements should be discussed first by the People's Assembly. "The government, whose members swore to be guardians of the constitution, violated it by approving the sale of gas to Egypt's historic enemy," said Abdel-Alim. He too alleged that Egyptian gas was used by Israeli tanks in killing "our Palestinian brothers".

Mohamed El-Omda, a deputy belonging to the Free Constitutional Party, blamed the 1978 Camp David Agreement between Egypt and Israel for the disasters that have hit the Palestinian people.

"It isolated Egypt and gave Israel a free hand to kill the Palestinians and Arabs and take hold of our natural resources at cheap prices," said El-Omda.

Hassan, Abdel-Alim and El-Omda asked MPs to withdraw confidence from the government of Prime Minister Ahmed Nazif, demanded Egypt stop selling gas to Israel and place Ebeid on trial. The request was rejected by a majority of MPs.