Egypt on Sunday terminated a long-term gas deal with Israel, a stakeholder said,
prompting Finance Minister Yuval Steinitz to express “deep concern” over what he
described as a move diminishing the peace treaty between the two
Neither the Foreign Ministry nor the Prime Minister’s Office
had any comment on the report, with one ministry official saying that the
relevant authorities were “looking into” the matter.
“We have no
information that the contract has been nullified,” one Foreign Ministry official
The official added that if the report was indeed true it would be a
“grave development” with ramifications on the normalization of ties between the
two countries under the 1979 peace treaty. But, the official added, this was not
an agreement between governments, but rather between private companies and the
Steinitz said he viewed with “deep concern the
unilateral Egyptian announcement over terminating the gas deal with Israel, both
because of its diplomatic and economic aspects. This is a dangerous precedent
that diminishes the peace treaty” between the neighboring
Opposition head Shaul Mofaz said that the move puts the ties
between the two countries at their lowest since the peace treaty was
According to Israel Radio, Mofaz said this was a “blatant
infringement of the peace treaty.” This step, he said, necessitated a
reaction from the US, which was the guarantor of the Camp David
However, diplomatic officials in Jerusalem said after speaking
with their counterparts in Egypt Sunday night that the issue was part of a
commercial dispute between private companies and Egyptian government
corporations that is presently being adjudicated abroad.
said that this had nothing to do with the status of Egyptian-Israeli diplomatic
relations. A senior Egyptian military official was quoted as saying on Egyptian
television that the gas deal was not nullified, but rather halted because of a
business dispute regarding the transfer of payment.
The developments came
after a string of crossborder pipeline attacks in the 14 months since Egyptian
president Hosni Mubarak’s ouster last February.
Corporation – a partner in the East Mediterranean Gas Company (EMG), which
operates the pipeline – said the Egyptian government had notified it that the
deal would be discontinued.
EMG said in a statement that it “considers
the termination attempt unlawful and in bad faith, and consequently demanded its
withdrawal,” and that Ampal and EMG’s other international shareholders were
“considering their options and legal remedies as well as approaching the various
Ampal holds 12.5 percent of shares in EMG, which since 2008
has carried gas from El-Arish in the northern Sinai Peninsula to Ashkelon. Gas
flow has been cut off since April 9, when perpetrators attacked the pipeline for
the 14th time since the start of the anti- Mubarak uprising.
sabotage, Egypt supplied about 40% of Israel’s natural gas, which is the
country’s main energy source. Ampal and two other companies have sought $8
billion in damages from Egypt for not safeguarding their
Officials have warned that Israel may be at risk of facing
summer power outages due to energy shortages. Electricity prices in
Israel have risen 20% since the attacks began.
The 1979 Egypt-Israel
peace treaty stipulates that normal economic relations between the two countries
will include the normal commercial sale of oil, later changed to natural gas,
from Egypt to Israel.
A natural gas deal was not signed until 2005, and
the $460-million pipeline was inaugurated four years later.
agreement has long been condemned by Egyptians, both out of widespread
opposition to normalization with Israel and because of claims Jerusalem was
receiving the gas for below-market prices.
Earlier on Sunday, Foreign
Minister Avigdor Liberman posted on his Twitter account a link to a Ma’ariv
story quoting him as telling Prime Minister Binyamin Netanyahu in a recent
meeting that the situation in Egypt was more disconcerting for Israel than the
situation with Iran.
According to the report that appeared Sunday,
Liberman said that in light of the developments in Egypt – which include the
introduction of Egyptian forces into Sinai to try to regain control there – the
IDF needed to rebuild and significantly increase the southern
Liberman said that the Egyptian forces, which Israel agreed
Cairo could move into Sinai, have proven ineffective in fighting terrorism
The foreign minister was quoted as saying that it was conceivable
that following the presidential elections in Egypt, Cairo would in a significant
way renege on the peace agreement and move a considerable number of troops into
Sinai.Globes and Reuters contributed to this report.