In a move likely to further raise the temperature on gas exploration in the East Mediterranean, Egypt’s national oil and gas company has cancelled its politically unpopular gas supply contract with Israel.
The Wall Street Journal reports that the decision is yet to be ratified by Egypt’s ruling military junta, though ill already exacerbate the insecurity of gas supplies to Israel, which previously relied on Egypt for 40% of its gas, and which has already been affected by repeated attacks on the Arish–Ashkelon pipeline since the overthrow of Hosni Mubarak.
The Egyptian decision was announced in Israel by Ampal-American Israel Corporation (AAIC), a 12.5% partner in the East Mediterranean Gas Company (EMG), which operates the Arish–Ashkelon pipeline under the contract signed in 2005.
That the move came from a commercial partner in the pipeline instead of an official source suggests the EGAS is seeking improved terms for a supply contract that many in Egypt have maligned as being on sub-commercial terms as part of Mubarak’s accommodative foreign policy with Israel.
EGAS also claims it has not been paid by EMG for several months, which AAIC denies. AAIC is seeking $8 billion in damages for losses resulting from the sabotage.
“We want to understand this as a trade dispute,” Israeli Foreign Minister Avigdor Liebermann said on Israeli radio, according to Reuters. “I think that to turn a business dispute into a diplomatic dispute would be a mistake.”
