Friday, 27 April 2012
Egypt: EGAS suspends deal to export gas to Israel
After 14 explosions on the pipeline, and the trials of those accused of selling the country short over the deal, EGAS has suspended its deal to export gas to Israel. The company cited contractual differences. It said that East Mediterranean Gas, founded by Hussein Salem and Israeli partners, “was not fulfilling its side of the deal”.
Muhammad Shu'aib , chairman of EGAS, said the decision was taken by the Egyptian General Petroleum Corporation (EGPC) and EGAS. “This is a commercial agreement between EGPC and EGAS on one side and the EMG, which is an Egyptian company specialised in exporting gas, on the other side. A trade agreement has conditions, duties and rights for each side. When one party does not fulfil its side of the deal, the agreement dictates what the other side is to do.” Abdallah Ghorab, Egyptian oil minister, said the termination was “a contractual matter and we are exercising our rights under the contract.”
International Co-operation Minister Fayza Aboul Naga said Israel had been notified five times that it was not meeting its financial obligations under the old contract. Egypt's Electricity Minister Hassan Yunis said earlier that the natural gas being exported to Israel under the controversial deal would be used domestically.
The reaction from Israel and the Israeli partners was markedly different. Yigal Palmor, an Israeli foreign ministry spokesman, denied that Israel had not been paying for the gas. Israel's finance ministry said it viewed the cancellation with “great concern”. They said it was “a government-backed contract sealed by a memorandum of understanding between Egypt and Israel that specifically refers to the (1979) peace treaty".
Egypt had been trying to raise the price of the gas sold through negotiation but there are many in Egypt who always opposed the deal as it was seen to be a way of channelling revenue into the pockets of members of the former regime. President Mubarak's sons have been tried for corruption over the deal.
According to Al Masry Al Youm, Fayza Aboul Naga told the Shura Council's Finance and Economic Affairs Committee on Monday that she expects foreign reserves to rise in May with the stabilisation of political and economic conditions. She added that foreign reserves went down by US$3 billion a month at the beginning of last year and then the rate of decline reduced to US$600 million in the past months.
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