Egyptian Companies Ordered to Pay $US 1.7 Billion to Israeli Gas Company

Egyptian security stand in the vicinity of flames following an attack by saboteurs on an Egyptian gas pipeline on July 12, 2011, at al-Arish in the north of the Sinai peninsula. (AFP/Getty Images)

Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corporation (EGPC) said on Sunday that they will appeal against the International Chamber of Commerce (ICC) arbitration ruling that they compensate Israeli Electric Corporation (IEC) and Eastern Mediterranean Gas (EMG) with $1.7 billion and $288 million respectively.

Reacting to the news, Egyptian Prime Minister Sherif Ismail said that negotiations between private Egyptian and Israeli companies to import gas from Israel will be halted.

Private companies have received orders from the Egyptian government to freeze dialogue on gas importation from Israel, until a decision is made on Egypt’s appeal against the recent ruling.

In addition, the government will suspend the issuance of permits to companies cooperating with Israel on gas deals.

Ismail added that the appeal will be submitted within the next six weeks.

Both EGAS and EGPC are Egyptian state-owned companies, while IEC is a state-owned Israeli electricity company.

Egypt has been selling gas to Israel for 20 years, but stopped after a militant insurgency in Sinai led to several concurrent attacks on the gas pipelines in 2012.

Globes, an Israeli business news outlet reported on Sunday that the arbitration ruling that the Egyptian companies pay a $1.7 billion fine was given on Friday and taken “between three arbitrators, behind closed doors” at the ICC.

The website also added that IEC is to be paid this compensation from the companies in Egypt “for the heavy damage caused to it by the failure to supply Egyptian gas.”  The IEC had initially asked for $3.8 billion compensation, while the EMG asked for $1.5 billion.

EGAS and EDPC both said in a statement to the Ministry of Petroleum that in accordance with the advice of Shearman and Sterling, a multinational consulting firm, they have taken “all the legal procedures to invalidate this arbitration,” and “to challenge it in the Swiss courts, in accordance with the procedures of litigation.”

Approximately two weeks ago, two Israeli companies, Delek Drilling and Avner Oil announced from Israel’s Leviathian field that they signed a preliminary agreement to supply Egyptian privately owned company, Dolphinus, with up to four billion cubic meters of gas per year for the next 10 to 15 years.

Mohamed Abdel Latif, the secretary general of the state litigation authority and president of the media committee, said in a statement to Aswat Masriya, that the litigation authority, which represents Egypt in international disputes, was not a party in this dispute as it is outside the litigation’s jurisdiction because it was not given legal proxy to represent the concerned parties.

Abdel Latif also said that the dispute does not bind Egypt and that seizure of state funds is impermissible.

This content is from: Aswat Masriya