Israel and Egypt are willing to enter into negotiations that will lead to a multibillion-dollar natural gas agreement and a reduction in the amount of fine the latter was ordered to pay by the International Arbitration Court.

According to sources, Israel may decide to allow Egypt pay half of the $1.73 billion fine it was instructed to pay the country, so talks on exporting Israeli offshore gas can advance.

Agreements between oil firms in both countries had been progressing not until an International Arbitration Court in December 2015, instructed Egypt to pay Israel damages for violating a contract to supply gas to state-owned Israel Electric Corp.

Egypt ever since, instructed its oil and gas authorities to suspend talks until the disagreement over the arbitration was resolved.

Talks are still ongoing and both Egyptian and Israeli authorities would be required to approve any final figure.

Israel has seen gas exports to Egypt and other nations in the region as its highest priority and resolving the arbitration obstacle will be vital to the export deal it is planning to seal and to strengthen ties with its partners.

Meanwhile, Egypt on the other hand needs fuel till it develops its own just discovered fields, and it can use an ineffective gas pipeline to transfer Israeli fuel for export to third countries.

“The stocks are rising with the understanding that an agreement with Egypt will increase the chances for exports. This would certainly help,” Noam Pincu, analyst at Psagot Investment House Ltd said.

Egypt has been exporting natural gas to Israel until the agreement was terminated in 2012 when its wells became insufficient and the pipeline transporting the gas was witnessing continuous damage. The country has said that any gas import agreement with Israel must include a resolve to the international arbitration cases, Bloomberg reports.

Anita Fatunji