Egypt’s Minister of Defense Field Marshal Abdel Fattah el-Sisi on February 13, 2024 near Moscow, Russia. (Sasha Mordovets/Getty Images)
Egypt’s government is denying that it is on its way to reviving energy cooperation with Israel following reports that owners of an Israeli gas field have reached an agreement to export trillions of cubic feet of natural gas through Egypt. According to Al Jazeera,
Noble Energy, the largest owner of [Israel’s] Tamar field, signed a non-binding letter of intent with Union Fenosa on May 5, to ship up to 2.5 trillion cubic feet of gas over 15 years, one-quarter of the field’s estimated capacity. Egypt would then liquefy the gas, preparing it for export. The deal could be worth as much as $1.3bn per year.
On Wednesday, Egypt’s cabinet quickly distanced itself publicly from the agreement, which, despite its lucrative potential, remains a politically sensitive point given public opinion towards Israel in Egypt — particularly with regards to bilateral energy cooperation. Following Egypt’s 2011 uprising, relations between the two countries sharply deteriorated especially in the wake of Muslim Brotherhood leader Mohammed Morsi’s election to the presidency. A series of attacks on the Sinai supply pipeline between Egypt and Israel led to the end of Egyptian gas exports to Israel as anger over the arrangement (which included selling gas to Israel at below-market rates) boiled over alongside domestic tensions around power cuts.
Egypt’s current military regime has since slowly (and quietly) attempted to smooth over lingering tensions with Israel. This posture is a delicate one as any overt normalization efforts with Israel would provide valuable ammunition to political opponents. However, despite the government’s denials, there is still a good chance that the deal could still go through. After all, there is no denying that Egypt is in dire economic straits and the boost offered by such a lucrative deal is surely not one Cairo can afford to quickly dismiss. Additionally, it could also work to reduce pressure from major energy companies operating in Egypt, which have been losing money as the country has scaled back gas exports in the face of greater domestic demand. Egypt is currently facing a complaint filed by Union Fenosa (one of the companies involved in the deal) with the International Chamber of Commerce last month.
The nature of the energy agreement also offers plenty of political cover for the government. Since the deal is between two foreign companies and Egypt would function primarily as a transit point, the Egyptian government’s involvement can readily be minimized in justifying its role in the agreement. The benefits of such an agreement will nonetheless be weighed against the political realities in a country that is facing a highly anticipated election in just a few weeks.
As assured as military chief Abdel Fattah al-Sisi is of a win in the upcoming elections, the leader has still shown himself to be a cautious political player. And given the extreme sensitivity around the energy issue in Egypt at the moment, any decision involving both gas and Israel is almost certainly a politically toxic one. As much as the energy issue is a time bomb, look for Sisi to delay any major decisions until after the election — and, if he can manage it, after the critical summer ahead.
