Egyptian gas resupplied to Israel at new price

Published April 24th, 2012 - 07:39 GMT
Egypt supplies roughly 40 percent of Israel’s gas supplies
Egypt supplies roughly 40 percent of Israel’s gas supplies

Egypt is ready to resume gas supply to Israel but at “a new price and with new conditions,” the country’s International Cooperation Minister Fayza Abul Naga said on Monday, according to the official MENA news agency

Egypt terminated the long-term contract to export gas to Israel last Thursday, saying Israel had not met the conditions of a gas export accord signed in 2005. Egypt supplies roughly 40 percent of Israel’s gas supplies. Abul Naga said Israel had been notified five times that it was not meeting its financial obligations under the old contract.

The Egypt-Israeli gas deal has been the subject of controversy in Egypt since the era of ousted president Hosni Mubarak, who was accused of selling gas to Israel for low prices.

Cairo’s Islamist parliament hailed the contract’s cancellation, saying it “salutes the decision to stop exporting gas to the Zionist entity” in a statement read out by the speaker, Saad al-Katatni. The decision “reflected the will of all Egyptians,” the statement said.

Egypt’s electricity and fuel minister, Hassan Yunis, said earlier that the natural gas being exported to Israel under the controversial 15-year deal would instead be used domestically.

“The gas that used to be exported to Israel will be directed to Egyptian electricity plants, as we have more right to it,” he told reporters. The gas contract with Israel, which signed a peace treaty with Egypt in 1979, was the largest trade deal between the two former foes.

Bedouin militants have bombed the gas pipeline -- which also supplies Jordan -- in Egypt’s Sinai Peninsula 14 times since a popular uprising ousted Mubarak in February 2011.

Mubarak now faces corruption charges, along with murder charges in a trial, over the gas contract, which critics said allowed Israel to buy gas at a low price and profited corrupt officials.

Israel downplayed the political significance of the cancellation on Monday, calling it a “commercial dispute” with no impact on diplomatic relations with Egypt. “We don’t see this cutoff of the gas as something that is born out of political developments,” Prime Minister Benjamin Netanyahu told a meeting of heads of the Israel Bonds fundraising organization. “It’s actually a business dispute between the Israeli company and the Egyptian company,” his office quoted him as saying.

A spokesman for Netanyahu insisted the agreement was still intact on Sunday. “The gas supply deal between Israel and Egypt has not been cancelled. There is a legal dispute between Israeli and Egyptian companies,” said spokesman Ofir Gendelman in a message posted on Twitter.

State-owned Egyptian company EGAS confirmed the termination of the 20-year contract, which was agreed in 2005, on Sunday. The Egyptian state firm supplied gas for the deal between another Egyptian firm, East Mediterranean Gas (EMG), and Israel.

Hussein Salem, a businessman and close Mubarak associate, is a major shareholder in the gas firm EMG. He is now on trial in absentia facing a range of corruption charges, including some related to his involvement in the gas deal.

Reflecting popular anger at the deal, Egyptian presidential candidate Amr Moussa, a former head of the Arab League and ex-foreign minister, said ending it was “a natural step in light of information related to corruption which tarnished this deal.” Israel has turned to more expensive fuel supplies and has warned residents to expect electricity outages this summer.

“We don’t see this cut-off of the gas as something that is born out of political developments,” Netanyahu told reporters. “It’s actually a business dispute between the Israeli company and the Egyptian company.”

Two Israeli officials made a brief trip to Cairo on Monday for talks on the gas deal, Cairo airport sources said, and Egypt’s ambassador met Israeli Deputy Foreign Minister Danny Ayalon to “provide clarifications”, Israeli media reported.

Israeli Foreign Minister Avigdor Lieberman said in a radio interview that Israel was interested in maintaining its peace treaty with Cairo and he believed “this is also a supreme interest of Egypt.”

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