Egypt cuts off Israel’s gas supply

East Mediterranean Gas Co. (EMG) has announced that the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS) have notified EMG that they are terminating the Gas Supply and Purchase Agreement between the parties.

EMG said, “[The company] considers the termination attempt unlawful and in bad faith, and consequently demanded its withdrawal. EMG, Ampal, and EMG's other international shareholders are considering their options and legal remedies as well as approaching the various Governments.”

The company has previously started legal proceedings against EGPC and EGAS back in October 2011 over the companies failure to provide gas under the supply agreement. The breaks in supply have been caused in part by constant sabotage attempts of the gas pipeline as it crosses the Sinai Desert. With the overthrow of the Mubarak regime, the government has been unable to protect the pipeline in the Sinai. The political situation has also shifted and the new government has wanted to end the supply agreement which many see as unfair to Egypt, due to the low price at which it was agreed.

EMG is seeking compensation from EGPC and EGAS for damages resulting from their contractual breaches. 

EMG already has further requested that an arbitral tribunal issue an order that EGPC/EGAS perform their obligations under the Source GSPA and rule that EGPC and EGAS are not entitled to terminate the agreement.  The arbitration is ongoing.  In addition, as previously disclosed, Ampal and certain other international shareholders of EMG have initiated the process of submitting claims against the Government of Egypt under various bilateral treaties for the protection of investments.

Edited from various sources by Peter Farrell

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