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Egypt Says Gas Agreement 'Suspended, Not Cancelled'

Senior Egyptian official says the agreement of supply of gas to Israel has only been suspended because of financial issues.
By Elad Benari
First Publish: 4/23/2012, 3:16 AM

Gas Pipeline
Gas Pipeline
Reuters

A senior official in the Egyptian army said on Sunday the agreement of supply of gas between Egypt and Israel was not cancelled but only suspended.

According to a report on Army Radio, the official said that the suspension came about following a dispute regarding the transfer of funds.

Earlier, Channel 2 News reported that Egypt had informed Israel that it is unilaterally cancelling the agreement. The announcement was made to EMG, the firm that receives the gas from Egypt.

Egypt’s natural gas company declared, according to the Army Radio report, that the gas agreement was cancelled for business reasons and not political ones. According to the report, the company said that Israel had failed to honor its obligations under the contract and did not pay for the gas for months.

Conversely, Ampal-American Israel Corporation, one of the partners in EMG, said that the termination of the agreement is invalid. The company said it will demand financial compensation, and that it is considering suing the Egyptian government.

Meanwhile, Energy Minister Uzi Landau said Sunday evening that the Ministry of Energy and Water has been preparing for about two years for the possibility of the supply of gas from Egypt coming to an end.

“Israel is working to establish its energy independence and rapidly develop Israeli supply sources,” Landau said, according to Army Radio. He noted that for the past year there has not been a steady supply of gas from Egypt.

The pipeline carrying gas from Egypt to Israel was blown up 14 times since the Mubarak regime was toppled in February 2011.