Cairo court rules gas can continue flowing to Israel

"Reuters" reports that Egypt's Higher Administrative Court today ruled that Egypt can continue exporting natural gas to Israel. The court referred the government's challenge to the original ruling to a panel of legal experts for a review of the whole case. The next session will be on March 16.

The ruling effectively voids a ruling by a lower court, which had accepted a petition by Egyptian opposition groups against the gas exports to Israel on the grounds that the constitution gave parliament the right to decide on sales of natural resources, a condition which was not met.

Despite that ruling, gas exports to Israel continued uninterrupted. East Mediterranean Gas Co. (EMG) currently provides Israel Electric Corporation (IEC) (TASE: ELEC.B22) with two-thirds of the natural gas contracted for. EMG is currently renegotiating the price for its natural gas deliveries to Israeli customers, in view of the rise in global energy prices since the original contract was signed.

Israel and Egypt signed an agreement for the delivery of seven billion cubic meters of natural gas to Israel over 20 years. On the basis of this agreement, EMG signed a contract to delivery gas to IEC at $2.75 per British Thermal Unit.

Egyptian businessman Hussein Salem owns 28% of EMG, Thai energy giant PTT Public Company Ltd. (SET: PTT) owns 25%, Egyptian National Gas Company owns 10%, Joseph Maiman owns 20% through Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL and Merhav MNF Ltd., Israeli institutional investors owns 4.4%, and US businessmen Sam Zell and David Fisher jointly own 12%.

The Ministry of National Infrastructures said in response, "We welcome the Egyptian court's ruling. Israel attaches strategic importance to the natural gas agreement with Egypt, and it is critical and essential for the Israeli energy market. We are sure that the diplomatic agreement between the Israeli and Egyptian governments will continue to be upheld."

Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2009

Cairo court rules gas can continue flowing to Israel

The ruling effectively voids a ruling by a lower court, which had accepted a petition by Egyptian opposition groups against the gas exports to Israel.