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Gazprom deal boosts Russia-Egypt ties

The Obama administration should take note of the warming trend in Russia-Egypt relations.
The company logo of Russian natural gas producer Gazprom is seen on an advertisement installed on the roof of a building in St. Petersburg, November 14, 2013. Repayments made by Russia's Gazprom to German utility RWE for gas purchases going back to 2010 helped drive earnings at RWE's trading unit 1.3 billion euros ($1.7 billion) higher in the first nine months of this year, RWE said on Thursday.  REUTERS/Alexander Demianchuk (RUSSIA - Tags: BUSINESS ENERGY) - RTX15DDT

Russia’s relationship with Egypt appears to be warming, though it remains unclear just how far Moscow and Cairo are prepared to go and at what price. Officials in Washington should follow this closely.

Among the most recent developments is a small but significant natural gas export deal between Russia’s Gazprom and Egypt’s EGAS, under which Russia’s state-controlled gas firm will deliver seven shipments of gas to Egypt in 2015. An Egyptian press report on the deal stresses not only that EGAS obtained a “favorable rate” for the gas, but that the agreement will allow for “grace periods” to pay for it. Taking place in parallel with Gazprom’s dramatic price increases for its exports to Ukraine — and Russian President Vladimir Putin’s insistence that Kiev pay in advance — the modest sale looks overtly political. EGAS officials note that they turned to Gazprom after negotiations with an Algerian firm collapsed due to strong European Union interest in increasing imports from the country to reduce gas dependence on Russia. Egypt’s Ministry of Petroleum appears to hope that this will allow the country to import Russian gas “at a rate that is lower than market prices” beyond 2015.

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