Nat'l electric: Egypt gas cut-off won't affect us

Egyptian officials: The decision is commercial, not political.

By GLOBES
April 23, 2012 13:26
2 minute read.
Egypt gas pipeline after attack in Sinai [file]

Egypt Pipeline Explosion 311. (photo credit: REUTERS)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user uxperience almost completely free of ads
  • Access to our Premium Section and our monthly magazine to learn Hebrew, Ivrit
  • Content from the award-winning Jerusalem Repor
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

"The events are not expected to have a material adverse effect on the company," said Israel Electric Corporation (IEC) in its official response to Monday's announcement by Egypt that it was terminating the gas supply contract with Israel.

Oil Refineries Ltd. also stated that it would not be affected by the cancellation of the agreement, because it has alternative liquid fuels.

Be the first to know - Join our Facebook page.


"The events are not expected to have a material effect on the company's financial condition or on its cash flow beyond what has already been reported," said IEC. Egyptian gas deliveries have been constantly interrupted by 14 attacks on gas pipelines in Sinai, which carry natural gas to Israel, since February 2011. Egypt delivered natural gas to Israel via the East Mediterranean Gas Company (EMG), in which Ampal-American Israel Corporation owns a 12.5% stake.

IEC also mentioned its international arbitration proceedings against Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS). IEC is seeking compensation for the heavy damage caused, and which will be caused to it, by the violation of the gas supply and purchase agreement.

Oil Refineries said that in view of the disruptions and delays in gas deliveries, it is using alternative fuels to Egyptian gas. "The company is using liquid fuels, which cost substantially more than Egyptian gas."

Sunday, Ampal, controlled by chairman Yosef Maiman announced that EGPC and EGAS had notified EMG that they were terminating the gas supply and purchase agreement with it.

The termination is a breach of the economic appendix to the Israel-Egyptian peace treaty, which states that Egypt will supply oil to Israel. The oil was replaced by natural gas a few years ago. The appendix states that Egypt undertakes to supply the amount of gas that Israel requests, in exchange for payment.



Egypt's Minister of Petroleum Abdullah Ghorab told news agency Bloomberg Sunday night that the decision to cancel the gas agreement was not political but commercial, and that Egypt was exercising its rights under the agreement.

Similarly, Mohamed Shoeib, chairman of Egyptian government gas company EGAS, which was the entity that cancelled the 20-year old agreement, told Egyptian newspaper Al-Ahram that the decision was of a commercial-economic nature. "EGAS decided to end the agreement because the other party did not fulfill its obligations," he said, meaning that EMG had not paid the Egyptian government royalties in full, which was because of the disruptions to the supply of gas by sabotage since the fall of Egyptian president Hosni Mubarak.

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS