BICOM

The Egyptian company that supplies gas to Israel has announced the termination of its supply, according to companies on both sides of East Mediterranean Gas (EMG), the joint venture that operates the pipeline between the two countries.

A statement by Ampal, the Israeli group that owns a 12.5 per cent stake in EMG, said the Egyptian suppliers had “notified [the joint venture] that they were terminating the gas supply and purchase agreement between the parties.” The statement, issued yesterday, added that “EMG considers the termination attempt unlawful and in bad faith,” and consequently demanded the decision be withdrawn.

Mohamed Shoeb, the head of the Egyptian Natural Gas Holding Company, which supplies the gas, said the decision to cancel the deal was not political. “This has nothing to do with anything outside of the commercial relations,” Shoeb told the Associated Press. He said the decision was made because Israel has not paid for its gas in four months.

Israeli Foreign Ministry spokesman, Yigal Palmor denied that Israel had not been paying for the gas, adding that Israel’s finance ministry viewed the cancellation with “great concern” and sets a “dangerous precedent that casts clouds over the peace treaties and the atmosphere of peace between Israel and Egypt”. The 1979 Egypt-Israel peace treaty stipulates that normal economic relations between the two countries will include the normal commercial sale of oil, later changed to natural gas, from Egypt to Israel.

Since the overthrow of former Egyptian president Hosni Mubarak, militant groups operating in the Sinai Peninsula have attacked the pipeline that carries Egyptian gas to Israel on several occasions, severely interrupting the flow of gas. The former Mubarak regime has also been accused of corruption in relation to the gas deal with Israel and of selling the gas too cheaply.

Before the attacks, the pipeline supplied around 40 per cent of Israel’s total natural gas needs, making it a vital part of the country’s energy infrastructure. Israeli officials have warned the country was at risk of facing summer power outages due to energy shortages. Israel’s own recently discovered offshore gas supplies are expected to come online over the next few years.

In a parallel development, Israel issued a warning over the weekend to all Israelis not to travel to the Sinai Peninsula, and for those already there to leave immediately, over fears of planned terrorist attacks.