Egypt's Decision to Import Israeli Gas is an "Important Decision", Says EFG Hermes

Egypt’s plans to import natural gas from Israel is an “important development”, according to EFG Hermes, one of the Middle East’s biggest investment banks.

Earlier this month Dolphinous Holdings, a private company run by a group of Egyptian investors, agreed to buy at least $1.2 billion of natural gas from Israel's offshore Tamar field. The Tamar partners would supply 5 billion cubic meters (bcm) of gas during the first three years of the seven year contract, Reuters reported.

“This is an important development, as we estimate that the reported gas volume represents 15 percent of Egypt’s total industrial consumption,” EFG was quoted as saying by Egypt Independent newspaper.

The agreement would “free up more gas allocations to local plants and potentially improve utilization rates; particularly in steel, cement and nitrogen fertilizers,” the investment bank added.

The Egyptian economy is facing severe gas shortage as local demand has ballooned in recent years amid declining domestic production. For the short term, the government is trying to source LNG from various sources to cater to growing demand.

In recent weeks Egypt has signed deals to buy LNG from Trafigura, Vitol, Noble Group and Sonatrach.