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Thursday, May 03, 2012

Shareholders sue Egypt over canceled gas deal with Israel

From Egypt Independent:
International shareholders in East Mediterranean Gas (EMG), the company that oversaw the now defunct Egyptian-Israeli natural gas deal, said on Thursday they were suing the government of Egypt for violating three bilateral investment treaties.

The decision to take legal action against the Egyptian government under treaties with the United States, Poland and Germany is the strongest move so far by the group, ensuring the dispute is handled diplomatically and not just commercially.

Egyptian state-owned oil and gas companies announced on 22 April the termination of gas sales to Israel, which were part of a 20-year deal, following a year of sabotage and pipeline attacks that had already disrupted supplies.

Thursday's announcement came after months of unsuccessful attempts to resolve the issue through negotiation, one of the shareholders, Ampal-American Israel Corp, said.

Egypt's Foreign Ministry could not immediately be reached for comment.

The investors, who include Thai energy giant PTT, US businessman Sam Zell and Israel's Merhav, are also suing the Egyptian oil and gas companies. Together they are seeking up to US$8 billion in damages.

"The investors' disputes with Egypt arise out of a series of acts and failures by the government of Egypt that have seriously undermined the value of the investors' investments in EMG," Ampal said in a statement.

The underwater pipeline, which EMG spent about $500 million on building, had been targeted by militants in Egypt's unruly Sinai peninsula numerous times, halting the flow of gas for most of the past year.

In 2010, prior to the attacks, EMG provided 2.5 billion cubic meters (BCM) of gas to Israeli customers. But that number was expected to more than double throughout the 20-year deal.
This should be interesting.