Ambassador Yasser Reda tells Deputy FM Ayalon decision to terminate agreement to supply natural gas to Israel ´financial, not political´

Egypt´s ambassador to Israel and Deputy Foreign Minister Danny Ayalon discussed on Monday the termination of Cairo´s agreement to supply natural gas to Israel.

During the meeting at the Foreign Ministry in Jerusalem, Ambassador Yasser Reda, who was accompanied by his deputy, stressed that the Egyptian government was not behind the decision to nix the deal, adding that "it is a financial, not political matter."

Ayalon said in response that Israel expects Egypt to resolve the dispute, adding that maintaining normal relations between Cairo and Jerusalem was crucial for regional stability.

The gas pipeline carrying gas from Egypt to Israel and Jordan has been sabotaged 14 times since the resignation of former President Hosni Mubarak. The last explosion took place a few weeks ago near the city of El-Arish.

The pipeline has been shut since an explosion on February 5.

Prime Minister Benjamin Netanyahu told a group of Israel Bonds leaders on Monday, "We don´t see this cutoff of the gas as something that is born out of political developments.

"It´s actually a business dispute between the Israeli company and the Egyptian company," Netanyahu´s office quoted him as saying.

Foreign Minister Avigdor Lieberman said: "The deal to supply gas is not part of the peace deal, but it is an important commercial deal that was an expression of the stable ties between the states.

"The unilateral cancellation of the deal is not a good sign, and we hope that this dispute will be resolved like any other commercial dispute, without taking it to the political realm," Lieberman told public radio from Azerbaijan where he is on a visit.

On Sunday, Egypt said it had scrapped the 2005 gas export deal with Israel, which generates 40% of its electricity from natural gas, with Egypt providing 43% of its gas supplies. The balance comes from Israel´s own Yam Thetis offshore gas field.

The accord with the East Mediterranean Gas Company (EMG), which exports the gas to Israel, was cancelled "because the company failed to respect conditions stipulated in the contract," Mohamed Shoeib, head of the state-owned Egyptian Natural Gas Holding Company (EGAS) told AFP.

The contract with Israel, which signed a peace treaty with Egypt in 1979, has always been controversial in the Arab world´s most populous country.

Agreed under the administration of ousted president Mubarak, it has been challenged in the courts over its secretive clauses, with opponents claiming Israel was paying below-market prices.

It was the largest ever trade deal between the two former foes. AFP contributed to the report (Copyright 2012 © Yedioth Internet 04/23/12)