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.
For more news and expert analysis about Egypt, please see Egypt
Politics & Security.
© 2012 Menas Associates
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