"Al Masry al Youm": Under the 2009 agreement, EMG pays $3.6 million per million British thermal units of gas.
5 May 11 12:17, Globes' correspondent
Egypt will officially open negotiations to review the price of natural gas exported to Israel with the aim of doubling prices, Egyptian daily "Al Masry al Youm" reports today. Sources at the Petroleum Ministry told the paper that East Mediterranean Gas Company (EMG) has agreed to begin negotiations later this month to review gas prices based on the 2009 agreement, which stipulates price increases on gas exports to Israel in accordance with an agreed upon percentage. Yosef Maiman owns 20.6% of EMG through Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) and his private company Merhav Group. "Al Masry al Youm" quotes sources as saying that the negotiations will likely include the price increases proposed by the Egyptian Natural Gas Holding Company (EGAS), the Petroleum Ministry and EMG so as to achieve a balance between the concerned parties with regards to prices and to ensure fair gas prices in accordance with global price increases.
According to the paper, under the 2009 agreement, EMG pays EGAS $3.6 million per million British thermal units (BTU) of gas. EMG, however, gets $1.5 per million cubic meters of gas transported to Israel, as it owns the infrastructure, including the pipelines, filtering plants, and compressors, which were built at a total cost of $550 million.
The sources said that Egypt will insist on doubling its revenues from its exported gas to Israel during the price revision, based on global gas prices for gas exported through pipelines to the European market, which do not fall below $5 per million BTUs, after deducting transport costs and distribution and marketing commissions.
The Egyptian General Petroleum Corporation’s net revenue from exported gas through the Egypt-Israel gas pipeline for the fiscal year 2009-2010 ranged between $225 and 250 million for nearly 2.1 billion cubic meters.
Ampal's share price fell another 3.2% on Nasdaq yesterday to $1.21, giving a market cap of $67 million, and fell 0.6% in morning trading on the TASE today to NIS 4.16. Ampal's share has fallen over 20% since April 27, when an attack on a pipeline in Sinai again halted EMG's gas deliveries to Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2011
