Thursday, June 2, 2011

Dispute Grows as Egyptian Gas Is Still Not Flowing to Israel

More than a month after saboteurs blew up an Egyptian pipeline supplying natural gas to Israel, the line is repaired but gas is not flowing and foreign shareholders of the company suspect politics to be the reason. They are threatening legal action against Egypt.

American and Thai shareholders in the pipeline have demanded urgent consultations to avoid resorting to binding arbitration based on trade treaties. One letter to Egyptian ministries from an American company with an Israeli chairman threatens a lawsuit of $8 billion.

In Israel, which depends on Egypt for 40 percent of its natural gas, the electric company has warned that customer rates could rise by 15 percent. Officials in the Israeli company that co-owns the gas line say the Egyptian government is afraid of popular opposition to Israel and the perception that Israel has had a sweetheart deal.

“The repair work was completed more than two weeks ago and we are waiting for the government to order the gas to start flowing, but so far the government is paralyzed,” Nimrod Novik, senior vice president of Merhav, the Israeli company, said in an interview. “Partly there is fear of more sabotage. There has been no decision not to supply gas, but nobody in the government wants to be responsible for a decision that is so unpopular in the street.” (read more)