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Mon 24 May 2004 04:00 AM

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Egypt-Israel tie up gas deal

Despite concerns over Israel's policies towards the Palestinians, Egypt is set to ratify a US $2.5 billion gas deal with the Jewish state.

Egyptian-Israeli economic relations are taking a turn for the better. State-owned utility Israel Electric Corp (IEC) signed a 15-year, $2.5 billion deal to buy natural gas from its North African neighbour.

As the sole supplier of electricity in Israel, IEC will buy 1.2 billion cubic metres of natural gas beginning in July 2006.

It will increase to 1.7 billion cubic metres beginning July 2007 for the next 14 years, totalling 25 billion cubic metres.

"The deal is not without risks but without any other real option there were a lot of advantages for Israel Electric," said the IEC statement.

The electricity company added it opted for Egyptian gas due to cheaper prices and the ease in purchasing from Egypt.

Despite Egypt’s concerns over selling gas to Israel due to the Jewish state’s policies towards the Palestinians, the government is expected to ratify the agreement.

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