Israel, Egypt Agree on Oil Price

Israel will be able to buy two million tons of Sinai oil at. $23.50 a barrel from Egypt for the first year after returning the Alma oil fields to Egypt, according to reports here and in Cairo. This is the essence of the agreement reached earlier this week between President Anwar Sadat and Israel Defense Minister Ezer Weizman and in Cairo. This is the essence of the agreement reached earlier this week between President Anwar Sadat and Israel Defense Minister Ezer Weizman and Israel Energy Minister Yitzhak Modai.

The agreement resolved the differences between Israel and Egypt over the price of oil. Egypt had asked for $32 a barrel which is the spot market Price in Rotterdam, while Israel insisted that it was willing to pay $23.50 a barrel set by the Organization of Petroleum Exporting Countries (OPEC).

Under the agreement, Egypt and Israel would renegotiate the price after the first year with the understanding that at that stage the spot market price will prevail. Also, after the first year Israel will be able to buy more than two billion tons of oil a year, but at the regular spot market price. Egypt currently sells its oil at the spot market price because it is not a member of OPEC.

The question of price became acute as the dare of Israel’s withdrawal from the oil fields approached. Israel will transfer the Alma oil fields in the Gulf of Suez to Egyptian ownership Nov. 25, two months sooner than is required by the Israeli – Egyptian peace treaty. The advance withdrawal is a good will gesture on Israel’s part in return for which Israel wanted a quick agreement on price.