Egypt Ends its Gas Agreement with Israel

Egypt’s national gas company EGAS made an announcement that it will be proceeding with plans to cancel a natural gas supply deal it formerly made with Israel.

EGAS released a statement that it will be terminating its contract with Ampal-American Israel Corporation, which is a partner in the East Mediterranean Gas Company (EMG). EMG, in response, has expressed dismay at EGAS’s decision and is demanding that they withdraw their plans for termination. It also added that the decision could jeopardize the existing peace agreement with Israel.

The chief of the Egyptian Natural Gas Company, Mohamed Shoeb, maintained that the choice to sever the deal agreement was due to a business dispute and not a political one. He also added that part of the decision was due to Israel failing to pay for its gas in the last four months, a claim that Foreign Ministry spokesman Yigal Palmor dismissed as false.

Yuval Steinitz, the finance minister, responded to EGAS’ decision, saying that the cancellation of the gas agreement can seriously hurt Egypt and Israel relations both politically and economically.

Opposition leader Shaul Mofaz is also chiding in and calling for the U.S. to intervene in the matter. The U.S. was present when the Camp David Accords were signed.

Israel and Egypt made a pact in 2005 in which Egypt agreed to allocate seven billion cubic meters of its gas to Israel over the next 20 years. EMG obtains its gas through an Egyptian pipeline, which it then sells to Israeli customers. The pipeline, however, is in constant jeopardy as it is often targeted since the ouster of Egyptian leader Hosni Mubarak. The pipeline is Israel’s main source of power, and the country has faced bouts of power outages due to shortages of energy. EMG has blamed this on the pipeline attacks and is now seeking compensation from Egypt for its failure to protect their investment.

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