Egypt to appeal USD1.76bn award to Israel in gas dispute

Israel Electric Corp, Israel’s state-owned electric utility, said on Sunday Egyptian natural gas companies will pay compensation of $1.76 billion for halting gas supplies.

Israel Electric (IEC) was forced to turn to more expensive fuels to generate electricity.

Before 2012, Israel imported natural gas from Egypt, though the pipeline, running through the restive Sinai Peninsula, was dogged by frequent sabotage. It has said that any gas import deal with Israel should include a resolution to worldwide arbitration cases.

The companies said they had “received instructions from the Egyptian government to freeze negotiations between companies to import gas from Israeli fields or to award import approvals until the legal position regarding the arbitration ruling and the results of the appeal are clear”. The company said it would act in coordination with the Egyptian companies to implement the arbitrator’s ruling.

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.

Four gas export deals between Israel and Egypt are under discussion: two with the Tamar gas reservoir partnership and two with the Leviathan partnership.

Dolphinus is a company that represents non-governmental, industrial and commercial consumers in Egypt. The Israeli electric company sued the Egyptian providers EGPC and EGAS for $4 billion in damages.

The initial legal suit against the Egyptian Gas Companies was filed by the East Mediterranean Gas Company (EMG), the company which built and operated the pipeline between 2008 and 2011.