The Israel Electric Corporation canceled its decade-old agreement to buy natural gas from the East Mediterranean Gas Company last month, we learn from the utility's financial statement for 2012.
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It had no alternative, explains the IEC: EMG has in fact no gas to sell. After the revolution in Egypt two years ago, says the IEC, the Egyptian government company that had been supplying EMG with gas itself unilaterally voided its supply contract.
While Egyptian businessman own the majority interest in EMG, a minority interest is held by the Israeli businessman Yossi Maiman.
The gas agreement had been reached during the period of the Hosni Mubarak regime. Since the former president's ouster in February 2011, the pipeline leading gas from Egypt to Israel was sabotaged on more than a dozen occasions.
In September 2011, the IEC’s board of directors began an international arbitration process with EMG and with the Egyptian Natural-Gas Holding Company (EGAS) over breach of contract. The IEC also sued for at least $2 billion in damages. The arbitration process is taking place in Paris under the auspices of the International Chamber of Commerce.
The IEC submitted its statements last month, and the first hearing will take place in July.
Meanwhile, EMG is pursuing an international arbitration process with the Egyptian government and its national energy companies on the grounds of breach of contract. These arbitration processes are taking place in Geneva and New York.
EMG estimates the damage it has suffered over the non-supply of natural gas to Israel and the laying of the pipeline between the two countries at about $8 billion.