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Report: Egypt drawing up new gas contract for Israel

October 4, 2011

JERUSALEM (JTA) -- Egypt is drawing up a new contract to provide gas to Israel at much higher rates, an Egyptian newspaper reported.

Selling gas to Israel has been unpopular on the Egyptian street since the opening of the pipeline in 2008. Deposed Egyptian President Hosni Mubarak has been accused of giving Israel a sweetheart deal on the gas, since Egypt lost more than $714 million on the pact.

"The final draft related to amending the prices for exporting natural gas to Israel will be completed soon," Petroleum Minister Abdullah Ghorab told the Al Ahram, according to Reuters. "It will see a big increase in the price."

Egypt also plans to renegotiate its deal with Jordan, Reuters reported.

Israel currently is not receiving any gas from Egypt -- the pipeline that supplies gas to Israel has been attacked six times in the past several months.

Egypt supplies Israel with more than 40 percent of its natural gas needs to produce electricity. The cost of electricity has risen more than 10 percent in Israel since the attacks began early this year.

Israel could reduce its dependence on gas from Egypt, said David Rosenblatt , the vice chairman and co-founder of the Arava Power Company.

“There are almost 2,000 megawatts of solar licenses stuck with the Israeli electricity regulator," he told JTA. "If those solar licenses were granted immediately, Israel could substantially reduce the sting of the expected dramatic raise of Egyptian natural gas prices.”

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