Egypt obliged to pay $2bn in compensation to Israel for halting gas exports

Mohamed Farag
3 Min Read
Delegation from EGAS went to Cyprus to conduct technical discussions on to import gas via a marine pipeline to Egypt, petroleum ministry says. (AFP File Photo)

A Swiss court issued a ruling obliging Egypt to pay a compensation of $2bn to Ampal-American Israel Corporation for the damage caused by the cessation of the export of natural gas from Egypt to Israel in 2012.

Government sources revealed Egypt’s intention to negotiate in order to reach a solution after the Swiss court rejected the appeal filed by the government, noting that the situation will be comprehensively studied before making any decisions.

The Israeli newspaper Haaretz quoted a source close to the jury as saying that the Egyptian government did not pay the compensatory amounts imposed by international courts recently, and if Egypt did not pay, it will impact the future of foreign investments and lower Egypt’s credit rating.

Former Petroleum Minister Osama Kamal said that refusing the appeal is merely an attempt to put pressure on the Egyptian side to ease conditions in terms of allowing foreign companies to import gas from Israel, where Egypt is the only outlet for it.

He pointed out that the decision to stop exporting gas to Israel was correct, even if Egypt paid the compensation. He noted that the $2bn is equivalent to the gap in exporting gas for less than a year if Egypt continued exporting gas at this low price.

The court said that the Egyptian General Petroleum Corporation (EGPC) and Egypt Gas are responsible for the attacks on the gas pipeline, which passes through the Sinai desert to Israel, according to the Israeli Electricity Company.

The two Egyptian companies had appealed the previous ruling issued in December 2015, which was also in favour of the Eastern Mediterranean Gas Company and with a compensation of $2bn. The company was owned by Egyptian businessman Hussein Salem and the Israeli Electricity Company.

Although Egypt challenged the ruling of the International Chamber of Commerce, the verdict this time cannot be challenged. Despite the ruling this month and the previous one in 2015, Egypt is facing two more cases before international arbitration regarding the issue of exporting gas to Israel—one in front of the United Nations Commission on International Trade Law (UNCITRAL), filed by Maiman, representing the Israeli Merhav Company, and the other pending before the Cairo Regional Centre for International Commercial Arbitration (CRCICA).

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