Post date: Apr 23, 2012 5:55:29 PM
JERUSALEM (APRIL 23, 2012) (IBA POOL) - Israel's prime minister on Monday (April 23) played down Egypt's termination of a gas supply deal after the Israeli finance minister said the move cast a shadow over the peace agreement between the two countries.
Israel's prime minister scrambles to reassure Israelis a cancelled Egyptian gas deal has nothing to do with waning political relations between the two countries.
Prime Minister Benjamin Netanyahu said the cancellation of the contract was a business issue not a diplomatic spat.
"We are talking about a business dispute between companies, a private Israeli company and the Egyptian Gas corporation. We are in constant contact with the Egyptian government, and I must say there is nothing political about it," Netanyahu said in Jerusalem.
Egyptian officials also said it was a trade issue, although there have been growing public calls for Egypt to review ties with Israel since the overthrow of Hosni Mubarak, for whom a peace treaty with Israel was a cornerstone of regional policy.
Minister of International Cooperation Faiza Abu el-Naga said Israel was welcome to negotiate a new contract.
Egyptian politicians welcomed the move to end a deal heavily criticised even under Mubarak. Opposition media and the public accused his government of giving Israel preferential pricing and using the deal to benefit his allies.
The energy data publication Platts reported that Egypt has since offered a new deal to Israel at a new price.
Israeli officials say gas has not flowed from Egypt to Israel for most of this year due to a series of attacks on the pipeline running through Egypt's volatile Sinai peninsula.
Israel has turned to more expensive fuel supplies and has warned residents to expect electricity outages this summer.
Two Israeli officials made a brief trip to Cairo on Monday for talks on the gas deal, Cairo airport sources said, and Egypt's ambassador met Israeli Deputy Foreign Minister Danny Ayalon to "provide clarifications", Israeli media reported. Egypt was the first of two Arab countries to sign a peace treaty with Israel, in 1979, followed by Jordan in 1994.
State-owned Egyptian company EGAS confirmed the termination of the 20-year contract, which was agreed in 2005, on Sunday. The Egyptian state firm supplied gas for the deal between another Egyptian firm, East Mediterranean Gas (EMG), and Israel. Gas from Egypt once accounted for about 40 percent of Israel's reserves of natural gas, the country's primary energy source. But with pipeline attacks in Egypt's Sinai peninsula stopping flows for most of 2012, Israel has looked elsewhere.
Israel's energy sector is likely to get hurt in the short term but Netanyahu said the country has been weaning itself off the once-crucial supplies and Israeli's energy minister Ukzi Landau says the country has been preparing for a switch over of supplies for two years now.
But the first gas field, Tamar, will only come on line around April 2013. The even larger one, the Leviathan Prospect, is due to begin production around 2017.