"Reuters" reports that an Egyptian administrative court earlier this week overruled a government decision to allow natural gas exports to Israel. The court accepted a challenge to the decision filed by a group of lawyers opposed to the exports.
The petitioners claim that Egypt's natural gas reserves are not sufficient enough to justify exports. They also oppose the exports because of the low price Israel pays for the natural gas.
Energy sources claim that the court ruling only applies to the contract that was the subject of the case, and will have no effect on Egyptian natural gas deliveries to Israel.
"Reuters" noted that the court ruling is subject to appeal, and that the Egyptian government sometimes ignores rulings it does not like.
Israel and Egypt have signed a 15-year contract for the delivery of seven billion cubic meters of natural gas. Egypt's East Mediterranean Gas Co. (EMG) has a contract to delivery natural gas to Israel Electric Corporation (IEC) (TASE: ELEC.B22) at $2.75 per British Thermal Unit. Deliveries through a pipeline from El Arish in Sinai to Israel began in May. However deliveries have been irregular for technical reasons.
Joseph Maiman is a shareholder in EMG through Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) and his private company Merhav MNF Ltd. A source at Merhav told "Globes" that Cairo had informed the company that gas deliveries would continue as usual, and that the correct legal interpretation of the contracts would be clarified in a few days.
Ampal approached EMG with respect to the matter and was advised that the Egyptian Government has made public its decision to shortly appeal the court order. Ampal was also informed that the natural gas supply through EMG's pipeline to Israel is proceeding uninterrupted.
The Israeli Infrastructure Ministry officially announced today that the Israeli Government is confident that the Memorandum of Understanding between the Egyptian and Israeli Governments of 2005 regarding the natural gas supply from Egypt to Israel will continue to be honored as signed. The Israeli Infrastructure Ministry also stated that it has no doubt that the commercial supply contracts between EMG and Israeli customers are in effect, shall be respected, and that the supply of natural gas shall continue uninterrupted.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008