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What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

$4 Billion Gas Deal Drips With Irony

Jeffrey C. Borneman | October 21, 2014

In one of history's more dramatic twists of fate, Israel and Egypt have signed a $4 billion, seven year natural gas deal whereby Israelis will ship gas to Egypt through the very pipelines which Egypt once used to ship gas to Israel  - prior to the sabotage of the Morsi government and the Israeli discovery of oceans of gas off its own coast.

According to the natural gas company Tamar, "Experts estimate the deal to be worth over $4 billion (3.13 billion euros)," as reported by Arutz Sheva.

It didn't take Israel long to sign the deal with Egypt after the Knesset agreed to export 40% of its huge gas finds. Prime Minister Benjamin Netanyahu has said exports "would bring in some $60 billion to state coffers over the next 20 years." Israel's natural gas finds are expected to sharply reduce its dependence on imports and allow Israel to become a major player in the Middle East Energy market.

The routes through which Energy sources flow may adapt in ironic ways, but the burning need and Demand do not. Egypt and Israel had been operating under the historic 1979 Peace Accord until President Mubarak was ousted and replaced by Moslem Brotherhood-backed Morsi for one year only, during which time relations between the two countries 'soured.' The Egyptian economy all but disintegrated under the weight of declining Energy and tourism revenues. This new deal with Israel is the largest trade agreement between the two periodic foes, and therein lies the irony: Israeli's traversed the oil-rich Middle East only to end up on the one strip of land that appeared to have no Energy resources and, now Egypt, once an exporter of gas to an Energy hungry Israel, must rely on its former customer for Energy imports. 

Investors Note - Investors should recognize that the majority of deals being struck between countries - those that begin with a $B - are in the areas of Metals, Defense, Energy and Food (MDEF™). It is also helpful to remember that nothing is made, moved or grown without Energy.

If you want to know more about how the MDEF™ Investing strategy is positioned in this, or other geopolitical possibilities, please contact us directly.

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