Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) this evening said that it had been informed by the Egyptian government they were terminating the gas supply agreement. Ampal holds 12.5% of EMG.
Ampal added that EMG considers the termination unlawful and in bad faith, and consequently demanded its withdrawal. Ampal said that EMG, Ampal, and EMG's other international shareholders are considering their options and legal remedies as well as approaching various governments worldwide.
In October 2011, EMG initiated arbitration proceedings against Egyptian government holding companies EGPC and EGAS due to their long-standing failure to supply the gas quantities owed under the agreement. EMG is seeking compensation from EGPC and EGAS for damages resulting from their contractual breaches. EMG already has further requested that an arbitral tribunal issue an order that EGPC/EGAS perform their obligations under the source gas agreement and rule that EGPC and EGAS are not entitled to terminate the agreement. The arbitration is ongoing. In addition, as previously, Ampal and other international shareholders of EMG have initiated the process of submitting claims against the Egyptian government under various bilateral treaties for the protection of investments.
Gas began to flow to Israel from Egypt in 2008 in the new pipeline after an investment of $460 million in building it by EMG. The contract for gas supply by the Egyptian government was for 20 years. Since the overthrow of the Mubarak regime in February 2011, the pipeline has been attacked by terrorists and blown up 14 times, disrupting the gas flow. No gas has reached Israel in the past few months.
Published by Globes, Israel business news - www.globes-online.com - on April 22, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012