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Lebanese newspaper: Military intelligence controlling gas exploration agreements in Egypt

Lebanese newspaper Al Akhbar revealed that the Military Intelligence took over deals to explore for gas in Egypt amid accusations of corruption, as the military body granted the right for gas exploration in the Mediterranean to Italian and British limited liability companies, despite the suitability of the other competitors’ offers.

The newspaper announced in a report that: “The Egyptian state is conducting a study to grant specific companies the right to prospect for gas in the western Mediterranean region, basing its decision on a fundamental consideration of ‘national security’, while it implicitly intends to act in favour of certain parties.”

Al Akhbar pointed out that: “The launch of a new bid for gas exploration in 11 western Mediterranean regions has been postponed until the completion of the legal amendments that require drafting a legislation, which is mainly related to who will be entitled to grant the prospection authorisation to the concerned companies.”

The newspaper added: “In this context, there is a perception based on granting the minister of petroleum the aforementioned jurisdiction, otherwise Abdel Fattah Al-Sisi or the prime minister will undertake the responsibility, especially as the new areas to be prospected are expected to contain important reserves according to preliminary studies.

The newspaper indicated that: “The Egyptian state prefers mainly Italian and British companies, bearing in mind that the decision to grant the direct authorisation to explore the gas fields, which relies on investigations carried out by sovereign agencies, was marred by corruption on large scales. Thus, the same procedure was implemented in order to evaluate the work of international companies in other fields such as Mercedes.”

Al-Akhbar quoted a source stating that: “Direct authorisations were granted following an investigation carried by several parties, especially the Military Intelligence. On the other hand, the activities of the concerned companies were also scrutinised,” noting that “the areas currently selected are clearly linked only to national security matters and nothing else.”

The same source referred to small financial differences between the offers, adding that: “There are other gains that can be achieved, especially with the presence of companies from certain countries which share economic and political interests with Egypt, unlike other enterprises coming from countries, with which the Egyptian state has clear disagreements.”

He pointed out that the companies, which will receive the direct authorisation to explore the gas fields, will not be allowed to resell its shares to third parties. Thus, the process will be regulated in accordance with specific measures, aiming to maintain the principle upon which these companies were chosen in the first place.

The Egyptian state seeks to write these conditions in the contracts that will be revised by the relevant authorities, before signing them. This is intended to avoid any future crises or resorting to international arbitration, such as recent occurrences.

The report added that: “The crisis at the present time is related to the drafting of legislation, which, when passed, cannot be constitutionally nullified under any circumstance, according to the amendments already applied in the constitution, and the appeal legal code before the constitutional courts.”

Petroleum and mineral resources minister, Tarek El-Molla, signed nine agreements relating to exploring and manufacturing oil and natural gas in the Mediterranean and Western Sahara, with a minimum investment of approximately $452.3 million.

By signing these accords, the number of oil-related agreements concluded by the ministry with investors and partners, since July 2014 until now, will reach 79, in addition to four new accords that have been approved by the House of Representatives and will be signed later.

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