EMG launches legal action against Egypt, IEC

Egyptian Mediterranean Gas submitted the request for arbitration as a result of EGPC/EGAS’s prolonged disruptions of gas supply.

October 9, 2011 23:32
2 minute read.
Gas pipeline explosion [illustrative]

gas pipeline 311 R. (photo credit: REUTERS)


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Ampal-American Israel Corporation announced Sunday that Egyptian Mediterranean Gas, in which it holds a 12.5 percent stake, has taken legal action against Egyptian and Israeli institutions, among them the Egyptian government and the IEC.

EMG announced to Ampal that it intends to initiate arbitration procedures with the International Chamber of Commerce against the Egyptian General Petroleum Corporation, the Egyptian Natural Gas Holding Company and Israel Electric Corporation.

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Egyptian Mediterranean Gas submitted the request for arbitration as a result of EGPC/EGAS’s prolonged disruptions of gas supply that they committed to supply under their contract with EMG, which has prevented EMG from supplying its customers, among them the IEC. EMG is seeking compensation from EGPC/EGAS for damages resulting from contractual breaches.

The disruptions in gas supply this year are partly due to terrorist acts on the Egyptian-Israeli gas pipeline, following a deterioration in relations between Israel and Egypt. Therefore, Ampal and other EMG shareholders have initiated arbitration procedures against the Egyptian government to protect their investments.

In July 2011, EMG shareholders announced that they would sue the Egyptian government for $8 billion in damages caused them as a result of natural gas supply disruptions in the Sinai pipeline. In addition, EMG submitted a Request for Arbitration with the International Chamber of Commerce (ICC) to begin arbitration proceedings with the IEC.

Ampal chairman, president and CEO Yosef Maiman commented: “As we have said before, Ampal, as well as the other international shareholders, are determined to pursue every available avenue to secure the smooth operation of EMG.”

Maiman added, “Ampal, as well as other international investors, have invested a substantial amount of money in EMG through direct investments and in EMG’s shares. EMG’s clients have also invested a substantial amount of money in power and industrial plants, all of which are based upon the gas sale and purchase agreements between EMG and its downstream clients. Moreover, these agreements are backed by the gas sale and purchase contract between EMG and the Egypt’s state-owned upstream gas supplier as well as by a memorandum of understanding between the Egytpian government and the Israeli government.

“As noted previously, we hope that the Egyptian government and the Egyptian state-controlled gas supplier elect to honor the obligations under the gas sale and purchase contract.

However, we will continue to take all necessary actions to protect our investments.”

EMG and its international shareholders retained the legal services of Freshfields Bruckhaus Deringer, LLP and M. Firon & Co. to represent them in the various arbitrations, claims, and other legal proceedings involving the dispute and the claims against the Egyptian government.

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