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Egypt ends natural-gas agreement with Israel (HAŽARETZ NEWS) By Avi Bar-Eli 04/23/12)Source: http://www.haaretz.com/news/diplomacy-defense/egypt-ends-natural-gas-agreement-with-israel-1.425900 HA'ARETZ} NEWS SERVICE HA'ARETZ} NEWS SERVICE Articles-Index-TopPublishers-Index-Top
Egypt has canceled its natural gas contract with Israel, claiming "violations of contractual agreements," with Israeli officials calling the move a blatant violation of the Israeli- Egyptian peace treaty.

The 2005 Egypt-Israel gas deal has come under strident criticism from leaders of the popular uprising that began early last year in Egypt. Critics charge that Israel was getting a bargain price for the gas, while cronies of former President Hosni Mubarak allegedly skimmed millions of dollars off the proceeds.

Nevertheless, Egyptian officials had been saying that they planned to honor the agreement.

The pipelines carrying natural gas to Israel in Jordan have been sabotaged 14 times since the uprising began, resulting in the suspension of the gas supply for about 70 percent of the time since February 5, 2011.

Israel called the Egyptian decision "unlawful and in bad faith" and said Egypt has failed to meet its supply obligations.

Egypt, meanwhile, says Israel hasn´t paid for its gas for four months, a charge Israel denies.

The Egyptian-Israeli company Eastern Mediterranean Gas, which supplies the gas to Israel, sought international arbitration in October because of Egypt´s failure to supply the quantities stipulated in the contract.

After Sunday´s announcement an EMG spokesman said, "Egypt doesn´t know what it´s doing. This is going to set them back 30 years, internationally and economically."

Finance Minister Yuval Steinitz termed the unilateral Egyptian announcement of "great concern" politically and economically. "This is a dangerous precedent that casts a pall over the peace agreements and the peaceful atmosphere between Israel and Egypt," he said in a statement.

Opposition leader and Kadima chairman MK Shaul Mofaz called for an immediate response from the United States as the guarantor of the Camp David peace accords.

Energy and Water Resources Minister Uzi Landau said his ministry had been preparing for about two years for the possibility that Egyptian gas supplies might stop.

"There has been no regular gas supply from Egypt for over a year and in any case Israel is working to make itself energy independent and to quickly develop Israeli sources," Landau´s office said in a statement.

The agreement among Egypt, EMG and the Israel Electric Corp., the main customer for the Egyptian gas, was signed in 2005 after numerous fits and starts that included a three-year hiatus during the second intifada. The contract called for the supply of seven billion cubic meters of natural gas a year for a period of 20 years.

EMG spent $500 million laying an undersea pipeline between El Arish in Egypt´s Sinai and Ashkelon, on Israel´s Mediterranean coast, and the gas began flowing in 2008.

But even then there were "opposition voices" in Egypt calling for a hike in the price, which was set in 2000, when the negotiations began.

Egypt eventually doubled the price it demanded from EMG, and the IEC had no choice but to accept a 46% hike in the price it paid to EMG. All this became moot, however, when the gas supply was disrupted by repeated sabotage. (© Copyright 2012 Ha´aretz 04/23/12)

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