´Egypt gas co. hires int’l law firm for Israel suit´ (JERUSALEM POST) By OREN KESSLER 04/25/12)
JERUSALEM POST Articles-Index-Top
The Egyptian gas company that canceled gas exports to Israel last
week has hired an international law firm, Egyptian media reported
Tuesday, after the Israel Electric Corporation threatened to take the
case to international arbitration.
IEC said Monday it would take legal action against the Egyptian
Natural Gas Holding Company (EGAS) and Egyptian General Petroleum
Corporation (EGPC) for violating its gas supply and purchase
agreement. Israeli officials say gas has not flowed from Egypt to
Israel for much of the past year due to a string of attacks on the
pipeline running through Egypt’s volatile Sinai Peninsula.
Speaking Tuesday to the state-run al-Ahram newspaper, EGAS CEO
Mohamed Shoeib rejected Finance Minister Yuval Steinitz’s claim that
the deal’s termination – which occurred Thursday but was revealed
only three days later – could mark a breach of the Egypt-Israel peace
“This contract is between EGPC and EGAS in Egypt, and EMG – it is a
commercial contract and the terms and conditions are clear,” Shoeib
told the paper. EMG, East Mediterranean Gas, is the consortium of
Egyptian, Israeli and international companies that oversees the
bilateral gas trade since a 20-year-deal was struck in 2005.
“It is the right of the seller to terminate if the buyer fails to pay
for four months,” Shoeib added.
Egyptian business executives close to EMG insist their Israeli
counterparts had fallen behind on payments, and that the cut-off was
purely a business-related move with no political implications.
On Monday Egypt’s Islamist-dominated parliament issued a statement
saying it welcomed the deal’s termination.
The parliament “blesses the decision to stop exporting gas to the
Zionist entity, and at the same time rejects threats uttered by some
Israeli leaders,” the Muslim Brotherhood’s parliamentary speaker Saad
al-Katatni said in apparent reference to Steinitz’s remarks.
“The parliament declares the Egyptian people will not accept these
threats, and that Egyptians are standing hand in hand with the
Palestinian people,” Katatni said. “We salute the souls of the
martyrs who sacrificed their lives for our rights. We will not rest
but will remain forever faithful.”
Mohamed Gouda, a member of the economic board of the Brotherhood’s
Freedom and Justice Party, told the pan-Arab newspaper Asharq Alawsat
that severing gas to Israel would come as a boon to Egypt’s moribund
Gouda said Egypt’s energy economy would be strengthened by keeping
its gas within its borders instead of exporting it. Abundant gas
reserves in Egypt, he said, would serve as a catalyst for foreign
businesses to set up shop there.
The article also quoted economist Kamal Ahmed as saying that despite
the legal complications that may arise as a result of the deal’s
termination, an increased domestic gas supply could increase Egypt’s
capacity to generate electricity from natural gas.
The Egyptian economists’ assessments stand in stark contrast to that
of the US financial analyst Citigroup, which last week issued a
report indicating that the biggest loser from the deal’s cancelation
would be Cairo.
The Citigroup report said that disruptions in Egyptian gas deliveries
since last year have given Israel Electric plenty of opportunities to
find alternative energy sources.
“Although the Israeli Ministry of Finance estimated that Egyptian gas
suspensions have cost Israel NIS 15 billion [1.7 percent GDP], we
don’t think that the damage to Israel is particularly visible,” the
report said, adding that one of Israel’s two offshore gas fields is
due to become viable within the next year.
“Since Israel’s offshore gas field Tamar is due to begin production
in April 2013, any further domestic shortfalls are likely to be
relatively brief.” (© 1995-2011, The Jerusalem Post 04/25/12)
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