(MENAFN - Kuwait News Agency (KUNA)) The Egyptian government has informed Israel of a unilateral decision to terminate the deal on Egyptian gas supplies to the Jewish country, Israeli media reported here Sunday evening.
The Israeli East Mediterranean Gas Company (EMG) which exploits the Egyptian gas reserves and operates the trans-border gas pipeline, has been notified of the termination of the long-term gas deal, Israel TV Channel Two reported.
Though the Egyptian decision could lead to a heavy economic damage on Israel, the political damage is heavier since the deal was based on the peace treaty signed by Egypt and Israeli in 1979.
The decision constitutes a strong blow to the ties between the two countries, according to the report.
Insiders of the Israeli Foreign Ministry confirmed the news to Israel Radio, voicing hope that the Egyptian decision would not be a final one.
The pipeline used to provide Israel with 40 percent of its gas needs before being hit by up to 14 acts of sabotage over the last year.
The sabotage led to commercial dispute between the stakeholders namely the Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Co., on one hand, and EMG and its partner Ampal-American Israel Corporation, on the other.
Israel Radio quoted observers as saying that the Egyptian move could be part of pressures on EMG to back down on suing the Egyptian partners for breaching the provisions of the agreement.
They believe that the move could be a result of EMG's legal action, adopted in October, 2011, against the Egyptian state-run energy companies, claiming USD eight billion in damage violating the agreements obligating these companies to supply natural gas to Israel.
The Israeli company, angered by the termination, deems it an uncalculated and unlawful move; it considers lobbying with international partners to bring pressures, including political ones, on Egypt to force it into resuming the gas supplies.
EMG, Ampal and international shareholders are considering all options and legal remedies as well as approaching the various governments to settle the dispute, the radio added. Israeli Minister of Energy and Water Uzi Landau said his government was preparing for the possibility of the termination of gas supplies from Egypt, adding that "Israel is working towards self-sufficiency in energy."
Shaul Mofaz, leader of the opposition Kadima Party, blasted the Egyptian decision as a new low in the relations between the countries and a clear violation of the peace treaty." Meanwhile, MP Binyamin Ben-Eliezer, who had signed the deal with Egypt in 2005 in his capacity as infrastructure minister at that time, said the termination of the deal indicates a possible conflict between the two countries.
The gas pipeline became operating in 2008 but the flow of gas through it was repeatedly disrupted due to the sabotage acts in Sinai Peninsula, northeast Egypt, since the revolution of January 25, 2011, in Egypt.