Egypt Cuts Off Natural Gas Exports to Israel

JERUSALEM (The Blaze/AP) -- Israel's prime minister on Monday scrambled to contain the damage from Egypt's decision to cut off natural gas exports, dismissing the matter as a mere "business dispute" as he tried to prevent a full-fledged diplomatic crisis.

The comments by Benjamin Netanyahu contrasted with earlier statements by Cabinet ministers who warned the Egyptian move threatened to harm already shaky relations between the two nations.

"We don't see this cutoff of the gas as something that is born out of political developments," Netanyahu said. "It's actually a business dispute between the Israeli company and the Egyptian company."

Abram.org has more about the recent Egyptian actions that will certainly create more angst between the two nations:

Egypt has unilaterally terminated its natural gas export contract with Israel, a shareholder in the export operating company, East Mediterranean Gas Company (EMG), said Sunday night.

EMG told Ampal-American Israel Corporation, which owns a 12.5 per cent stake in EMG, that Egypt was ending the Gas Supply and Purchase Agreement between the two parties.

“Egyptian General Petroleum Corporation [EGPC] and the [state-run] Egyptian Natural Gas Holding Company [EGAS] notified EMG that they were terminating the Gas Supply and Purchase Agreement between the parties,” the Ampal statement read.

The company added that "EMG considers the termination attempt unlawful and in bad faith, and consequently demanded its withdrawal," noting that EMG, Ampal and EMG's other shareholders were "considering their options and legal remedies as well as approaching the various governments."

Israel and Egypt signed a historic peace treaty in 1979, and while relations have never been particularly warm, the quiet border has been critical for the security of the two neighbors. Egyptian energy exports to Israel and other business ties have helped keep the peace.

Since long-time Egyptian President Hosni Mubarak was toppled in a popular uprising last year, Israel has grown increasingly jittery about the state of relations with Egypt, particularly since a series of pipeline attacks by Islamic militants have repeatedly disrupted gas shipments to Israel. The rise of Islamic parties in parliamentary elections has only added to those fears.

Late Sunday, Egypt's national gas company said it had cut off exports to Israel, saying its Israeli partner had not paid its bills.

Israeli officials say the payments were halted because repeated attacks by militants on the gas pipeline have all but cut off gas shipments for the past year.

Israel's finance minister, Yuval Steinitz, called the decision a "dangerous precedent that overshadows the peace agreements and the peaceful atmosphere."

That view was echoed by Israeli Energy Minister Uzi Landau. "The pretext is that this is a business dispute, but we see it is not a business dispute," he told The Associated Press, warning that the gas cutoff would worsen power shortages expected this summer and hurt ties between the countries.

Israel and Egypt signed a 20-year agreement for Egypt to provide natural gas to Israel in 2005.

That deal has become a symbol of tensions between Israel and Egypt since last year's uprising. For many Egyptians, it typifies the close relations Mubarak forged with Israel and how his associates benefited greatly from such business deals.

Critics charge that Israel got the gas at below-market prices, a charge Israel denies, and that Mubarak cronies skimmed millions of dollars off the proceeds. Egyptian militants have blown up the gas pipeline 14 times since the uprising more than a year ago.

The repeated disruptions have raised tensions with Israel, which relies on Egypt for 40 percent of its natural gas needs.