Egypt has agreed in principle to sell oil to Israel from Sinai fields after an Israeli withdrawal from the region, according to informed sources.
The reported agreement grew out of quiet negotiations involving U.S., Israeli and Egyptian officials as well as representatives from at least two American oil companies during the Camp David summit conference last month.
Details of the accord are still being negotiated by all parties during the current talks at Blair House. The Israelis are known to be seeking a guaranteed source of Arab oil supplies and are pressing the Egyptians for preferential terms.
Egypt wants to regain its territories in the Sinai as early as possible in part to press the development of oil resources there. More than 20 foreign companies are now drilling for oil in Egypt.
Complicating the Sinai oil negotiations is the claim by Standard Oil of Indiana (Amoco) and Superior Oil Company of Houston to the same fields in the Sinai. Egypt gave concessions to Amoco in the early 1970s and Israel subsequently issued concessions to a Panamanian-registered company called Neptune for part of the same area. Neptune is effectively controlled by Superior and a Texas independent oil man, Richard McRief.
Neptune is now producing between 10,000 and 20,000 barrels a day from the Alma oil field, as it is known. The oil is refined at Israel's Haifa refinery. Amoco is operating at a number of locations in Egypt, including adjoining territory in the Sinai, with a production of 130,000 barrels a day.
Egypt is barely in the ranks of the major exporters and seems unlikely to achieve its 1-million-barrel-a-day 1980 export goal. Since the 1973 war, both the Egyptians and Israels have been encouraging foreign, and in particular American, oil companies to enter into concession agreements to explore and produce oil in the Sinai region, particularly offshore.
Israel is almost wholly dependent on oil imports. Two percent of its supply comes from wells inside its pre-1967 borders.
A secret addendum to the 1974 Sinai II agreement negotiated by then-Secretary of State Henry A. Kissinger committed the United State to guaranteeing Israel's oil needs in the event it was cut off from normal supplies. Most of Israel's imports come from Iran, and smaller amounts from Mexico.
As recently as 1972, however, Israel was producing about 80,000 barrels a day from the Abu Rudeis fields it occupied in the Sinai after the 1967 war. These fields were subsequently returned to Egypt after the 1974 withdrawals.
In 1976 Israel signed an agreement with Neptune, which has since found oil inside the Sinai territory still occupied by Israel.
The Egyptains have claimed that the Neptune concession area granted by Israel occupies some, if not all, of an area already given in concession to Amoco.
During the fall of 1976 Isreaeli gunboats attacked buoy markers placed by Amoco in the Gulf of Suez to delineate potential drilling areas.
Kissinger, after meeting with Amoco officials, sent Israel a warning that the U.S. government regarded the gunboat attacks as provocative.
Amoco and the Superior Oil officials who control Neptune have yet to come to a firm agreement on the disputed Sinai oil concessions.
Last January, Egyptian premier Mamdouh Salem said that the Egyptians would ask Israel for $2.1 billion in compensation for oil extracted from the Sinai fields during the Israeli occupation.
In recent months, and especially since the Camp David talks, however. Egyptian and Israel officials have observed a verbal cease-fire on the terms of a Sinai oil settlement.
Presistent reports of difficulties in the Middle East peace talks yesterday prompted the spokesman for the negotiations to insist: "There is no crisis, no deadlock, no emergency."
The spokesman, George Sherman, made that assertion in te wake of continuing press speculation about the meaning of Israeli Foreign Minister Moshe Dayan's public remark Tuesday that difficulties had been encountered in the talks.
That prompted President Carter, who met with the Israeli and Egyptian delegations Tuesday, to tell reporters his intervention. Yesterday, Sherman, while conceding that many issues are still unresolved, said: "None of us feels concerns have been raised which could not be met."
Reports published in Israel said the issue that prompted Dayan's talk of "difficulties" concerned the question of full Egyptian diplomatic recognition of Israel in exchange for Israeli withdrawal from the occupied Sinai peninsula.
Reliable sources said this problem, while something of a snag, was not regarded by the parties involved as insoluble.
A much greater dfficulty, the sources said, continues to be Egypt's desire for the talks to produce some reference, in addition to an Egyptian-Israeli peace treaty, to a solution for the Israeli-occupied West Bank and Gaza Strip and the Palestinian Arabs living in those areas.