Egyptian onlookers stand in front of a fire ball in the distance following an attack in February 2012 on a pipeline that supplies gas to Israel in the north of the Sinai peninsula. Egypt has scrapped a 2005 gas export deal with Israel, which relies on Egyptian natural gas for 40 percent of its supplies to produce electricity, the chairman of a government holding firm said on Sunday. (AFP Photo)
The head of the Egyptian Natural Gas Holding Company said Sunday it has terminated its contract to ship gas to Israel.
Israel National News reported:
Egypt informed Israel Sunday afternoon that it is unilaterally cancelling the agreement of supply of gas to Israel. The announcement was made to EMG, the firm that receives the gas from Egypt, and reported on Channel 2 news.
The peace treaty with Egypt includes a financial appendix, in which Egypt agrees to supply Israel with oil. Several years ago the appendix was changed so that the oil was replaced by gas. The treaty commits Egypt to supply Israel with the amount of gas it requires for a specified period, in exchange for payment.
Egypt’s unilateral abrogation of the treaty causes “tremendous financial damage” to Israel, and to the Amgas and Ampal companies, according to Channel 2. However, the primary damage is diplomatic, reporter Amnon Abramovich said.