Monday, Jun 04, 2007
CAIRO (Dow Jones)--BG Group PLC (BG.LN) is considering exporting natural gas from Gaza to Egypt rather than Israel, a company official said Sunday.
"Gaza Marine's discussions with the Israelis are progressing, but bringing the gas to Egypt is an option this time," Ian Hewitt, President of BG Egypt, told Dow Jones Newswires in an interview.
U.K., Reading-based BG controls the rights to the natural gas fields discovered off the coast of the Gaza Strip in 1999 and 2000.
BG held talks with Egyptian government about a year ago to export Palestinian gas through a future Gaza offshore pipeline to the Egyptian port of Al Arish.
The gas could then be exported from Egypt to Europe or the U.S. as liquefied natural gas, or LNG.
BG, the U.K.'s third-largest oil and gas company, has also resumed talks with Israel after the Israeli Cabinet reversed a decision April 30 to prohibit purchases of natural gas from the Palestinian Authority, opening the way for a possible deal.
Israel previously had been involved in negotiations with BG and the Palestinians about buying gas, but concerns that the money could end up funding militants have been a major roadblock, according to Israeli media reports.
BG owns 90% of the Gaza Marine license and Palestinian-owned Consolidated Contractors International Co. SAL owns 10%. The Palestinian Authority has an option to take a stake in the field once its development is sanctioned.
"When we did the survey to see where the pipeline would go through we looked into both routes to Israel and Egypt and they were both economically the same," Hewitt said.
Still, Hamas minister of economy Ziad Al Zaza told Dow Jones Newswires last week that the Palestinian government wouldn't approve any deal to export BG's natural gas from Gaza to Israel, despite the Palestinian president's office welcoming talks for such a contract.
Bringing the gas to Egypt could supply around 1 trillion cubic feet of gas to BG's planned third train at its Idku project.
BG holds a major stake in the Egyptian LNG project located at Idku at the Mediterranean Sea, which has two trains producing 7.2 million tons a year of LNG for export.
"A third train at Idku would probably materialize by 2011 or 2012," Hewitt said.
A third train with the same size and capacity as the first two would require 4 trillion cubic feet of gas.
Still, should the Gaza gas not come to Egypt, other sources of gas are available to supply gas to the third train, according to Hewitt.
"There are a number of third-party suppliers that are interested in exporting their gas via Idku and we have had a number of discussions about doing that," Hewitt said.
Hewitt declined to disclose the names of the suppliers.
-By Maha El Dahan, contributing to Dow Jones Newswires, +20122267850, mahaeldahan@yahoo.com
Copyright (c) 2007 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
04-06-07 0717GMT
