Appeals planned against order to halt Egyptian gas to Israel

A Cairo Court plans to hold a hearing to consider a motion by the State Judicial Authority to repeal a decision by the Cairo Administrative Court to halt Egypt's exports of gas to Israel.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 2 -- The Cairo Court for Urgent Cases plans to hold a hearing Dec. 15 to consider a motion by the State Judicial Authority to repeal a decision by the Cairo Administrative Court (CAC) to halt Egypt's exports of natural gas to Israel.

In addition to the court, some 30 individual lawyers have filed six separate motions—to be reviewed on Dec. 15, 16, 18, and 20—all aimed at repealing CAC's Nov. 18 verdict.

The underlying appeal is that CAC's verdict against the government cannot be sustained, as there is no contractual relationship between the state of Egypt and the state of Israel concerning exportation of natural gas.

Instead, the contract is between the Egyptian General Authority for Petroleum and Eastern Mediterranean Gas, a private energy consortium coowned by Egyptian businessman Hussein Salem and the Israeli Merhav Group.

The 30 lawyers thus claim that the export of gas does not fall under CAC's jurisdiction because the agreement is a purely commercial affair.

CAC had ruled that the export of Egyptian gas to Israel cannot be carried out without parliamentary approval and ordered its halt, saying, "National resources belong to current and future generations, and the executive must first get parliament's approval."

CAC's ruling came after opposition groups sued to suspend exports, arguing that the 15-year fixed-price agreement—rumored to be as low as $1.50/btu—lacks any mechanism for Egypt to adjust prices to reflect current markets.

Dissatisfaction in Egypt, fueled also by Israeli actions in Palestine, is especially high as gas for December delivery last week closed at $6.53/Mcf on the New York Mercantile Exchange.

The agreement to supply Egyptian gas to Israel was signed in June 2005 by Egyptian oil minister Sameh Fahmi and Israeli infrastructure minister Binyamin Ben Eliezer (OGJ, Oct. 20, 2008, p. 34).

The gas being supplied to Israel goes to Israel Electric Corp., which has estimated that 20% of the electricity produced in Israel over the next decade will be from Egyptian gas.

Contact Eric Watkins at hippalus@yahoo.com.

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