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Egypt/Israel: Energy deal comes to a halt

The gas supply between Egypt and Israel has come to a sudden end. The unpopular deal which was signed by the then president Mubarak was seen as a prejudice by the Egyptians because it is believed that Israel got the better end of the deal at a bargain price with regards to the price. Israel denies it. Since the gas pipeline opened in 2008 at a tune of $640 million, it has always been a source of controversy.
Egyptian state-run companies namely the Egyptian General Petroleum corporation and the Egyptian Natural Gas Holding Company supply about 40% of Israel’s gas which is used to generate electricity. The stoppage of supply took effect after informing the East Mediterranean Gas which exports gas to Israel.
Egypt claims a breach of contract for “terminating the gas supply and purchase agreement” whilst the Israelis consider their actions “unlawful and in bad faith” as the Egyptians have failed to supply gas quantities that they owed. Israel is willing to take the case for arbitration and seek compensation. The pipeline linking the countries has been subjected to frequent attacks since last year.
The energy supply deal played a major role for a peace deal between the two countries but this unilateral decision will weigh heavily on their bilateral relations and on Israel’s economy. Israel views this unilateral action as a violation of the 1979 peace treaty which obligated Cairo to provide them with the oil that they can afford as far as they can pay for it.  Oil was later changed to gas because its quantity was being exhausted.

Short URL: http://me-confidential.com/?p=3760

Posted by on Apr 24 2012. Filed under Energy, Headlines. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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