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On 15 January 2020, Israel and Egypt announced that Egypt was beginning importing natural gas from Israel. According to Reuters, the agreement entails Israel exporting to Egypt 85.3 billion cubic meters of gas over 15 years from the Leviathan and Tamar fields in the east of the Mediterranean.
The backstory to this deal is complicated. From the Egyptian side, the deal is supposed to appear as private sector investment with the firm East Gas as the Egyptian private sector partner.
However, the deal has a major shadowy government player, the Egyptian General Intelligence Service (GIS) which indirectly owns East Gas. Online newspaper Mada Masr, which is well-known for its investigations, uncovered the complex network of the offshore companies owned by GIS aiming at making the greatest profits from importing and transporting the Israeli gas.
According to the Mada Masr investigation, the profits from this deal will not end up in Egypt’s public budget but, instead, will be reaped by the General Intelligence Service and its high-ranking generals.
Through this network of shell corporations in the British Virgin Islands, Luxembourg, Switzerland, and the Netherlands, it will be easy to escape taxation and legal responsibility.
The deal has also raised concerns over the treaties concerning maritime borders between Egypt, Cyprus, and Israel in the East Mediterranean. In 2014, Egyptian President Abdelfattah al-Sisi signed a treaty with Cyprus regarding the delimitation of their sea boundaries and the Exclusive Economic Zones (EEZ – the sea zone that a coastal country has the right to utilise exclusively).
The profits from this deal will be reaped by the General Intelligence Service and its high-ranking generals.
This treaty confirms an older agreement between the two parties signed in 2003. According to the UN Law of the Sea Bulletin No.52, the 2003 agreement sets the delimitation of the exclusive economic zone by the median line of which every point equidistant from the nearest point.
It also states that if either of the two parties is engaged in the delimitation of its exclusive economic zone with another country, it should notify and consult the other party.
However, in 2010 Cyprus and Israel had an agreement on the delimitation of their EEZ without notifying Egypt. The result of these agreements is that the huge Leviathan gas field is located just 2 km away from Egypt’s newly set sea border.
Nael al-Shafei, a lecturer at the Massachusetts Institute for Technology and an activist on the issue of Mediterranean gas sources believes that the al-Sisi regime has given up Egypt’s rights in the East Mediterranean gas to Cyprus, Greece and Israel.
He published a map that illustrates that Leviathan gas field is closer to Egypt than Israel and the Egyptian officials misled the Egyptians about the true intentions behind these agreements.
Other concerns that arise are related to the lack of transparency of the process of signing these agreements by an autocratic military regime such as Egypt’s.
Another vital player in this game is Turkey, which is not content with the delimitation agreements between Egypt and Cyprus because it grants Cyprus an exclusive economic zone that bonds it directly with Greece.
On the other hand, on 2 January 2020, Israel, Cyprus, and Greece announced a new pipeline project called East Med.
The agreements between Egypt and Cyprus will allow the East Med pipeline, that Israel wishes to build under the Mediterranean to export its gas directly to Europe, and to run directly through Cyprus and Greece.
In this case, the biggest states in the Eastern Mediterranean – Egypt and Turkey – will not profit or have a say in this new project.
In a quick response, Turkey has signed an agreement with Libya on maritime borders which allows the former to drill and keep a close watch on the East Mediterranean Gas projects and its key players.
These rising conflicts will certainly add further tension to the complex Middle East landscape while Europe remains the most important destination for these huge supplies of gas.