East Mediterranean Gas Pipeline Company (EMG)

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In 2007, the 88km East Mediterranean Gas Company (EMG) pipeline project between Al-Arish (Egypt) and Ashqelon (Israel) reached financial closure. EMG was the only company authorized to engage in the business of exporting natural gas from Egypt to Israel under a Memorandum of Understanding signed in 2005 by the Governments of Egypt and Israel. EMG signed a gas sales agreement with Egyptian General Petroleum Corporation (EGPC) and Egyptian Natural Gas Holding Company (EGAS), the state-owned enterprises of Egypt, to purchase 7 billion cubic meters of gas per year, for a term of 15 years with option for EMG to extend the term for a further 5 years. As of December 2007, EMG shareholders were Mediterranean Gas Pipeline Limited (28%), PTT Public Company Ltd (25%), Merhav Group (25%), EMG-EGI LP (12%) and Egypt’s state owned enterprises EGPC/EGAS (10%). The US$469 million project comprised of an export terminal in Al-Arish in northeastern Egypt on the shores of the Mediterranean, a 26 inch diameter, 87.6 kilometer offshore pipeline and a receiving terminal in Ashqelon in Israel. EMG concluded commercial offtake agreements with Israeli state-owned electricity utility, Israel Electricity Company (IEC), and with private companies. The National Bank of Egypt was to finance the project with a US$380 million loan. The project became operational in March 2008.