Egyptian court: Halt natural gas sales to Israel

Court accepts position against 15-year fixed price deal; Israel "does not doubt" deal will be honored.

gas production facility 248.88 (photo credit: AP)
gas production facility 248.88
(photo credit: AP)
An Egyptian court has ordered the suspension of natural gas sales to Israel amid public criticism that the sales are being made at below market prices. The ruling Tuesday came after opposition groups sued to suspend exports, arguing that the 15-year fixed-price agreement signed between Egypt and Israel in 2005 lacks any mechanism under which Egypt can adjust prices to reflect current market conditions. "The constitution should protect the country's natural resources," a court official quoted Judge Mohammed Attia as saying during Tuesday's hearing. The official said the judge had ordered the Egyptian government to obtain parliament's approval before authorizing contracts related to the country's natural resources. An Egyptian government spokesman was not available for comment. However, Israel's National Infrastructures Ministry said in a statement that they were confident the deal would be honored. "In response to reports out of Egypt this morning, the National Infrastructures Ministry clarifies that the State of Israel is convinced the political agreement between the government of Egypt and the government of Israel will continue in accordance with the Memorandum of Understanding signed between the two countries in 2005. "The ministry does not doubt for a moment that the business agreements between the Egyptian gas company and its clients in Israel will be upheld and that the supply of gas from Egypt to Israel will continue as usual," according to the statement. The ministry also noted that gas exports have not yet stopped. The 2005 deal licensed Cairo-based East Mediterranean Gas, which is partly owned by the Egyptian government, to sell 1.7 billion cubic meters of natural gas to Israel Electric at a price critics say is set at $1.50 per million British thermal units (1,000 cubic feet). Natural gas for December delivery closed Monday at $6.53 per 1,000 cu. ft. on the New York Mercantile Exchange. Faced with mounting criticism over the deal, Egypt's oil minister pledged in June to review the export price. Israel has converted several power stations to natural gas in recent years in efforts to reduce pollution. The ministry has also been looking northeast towards Russia and central Asia as potential future suppliers. Former Egyptian diplomat Ibrahim Yousri, who started an anti-government campaign with other activists this year called "No For Gas Catastrophe," described Tuesday's ruling as "a victory for the nation that protested gas exports to Israel." The campaign's goal was to collect one million signatures to halt gas exports to Israel.