Egypt has terminated a long-term deal to supply Israel with gas after the cross-border pipeline sustained months of sabotage since a revolt last year, a stakeholder in the deal said on Sunday. Ampal-American Israel Corporation, a partner in the East Mediterranean Gas Company (EMG), which operates the pipeline, said it had notified Egypt it was "terminating the gas and purchase agreement". The company said in a statement that the Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Company (EGAS) had notified them of the decision, adding that "EMG considers the termination attempt unlawful and in bad faith, and consequently demanded its withdrawal". Mohamed Shoeib, chairman of EGAS, told Al-Masry Al-Youm that EGAS is using its right to terminate the contract due to EMG's breach of the gas supply agreement. He added that the decision was made after a thorough legal review by local and international legal experts. A source within the petroleum ministry told Al-Masry Al-Youm that the dispute is purely commercial and has no other connotations. EMG's statement said EMG, Ampal, and EMG's other international shareholders were "considering their options and legal remedies as well as approaching the various governments". Before the supply had been disrupted by sabotage, Egypt supplied about 40 percent of Israel's natural gas, which is the country's main energy source. Israeli officials have said the country was at risk of facing summer power outages due to energy shortages. Companies invested in the Israeli-Egyptian venture have taken a hit from numerous explosions of the cross-border pipeline and are seeking compensation from the Egyptian government of billions of dollars. Ampal and two other companies have sought $8 billion in damages from Egypt for not safeguarding their investment. The Egyptian decision is a potential blow to the country's ties with Israel, already tested by the toppling of Israeli ally President Hosni Mubarak a year ago. Egypt was the first of two Arab countries to sign a peace treaty with Israel, in 1979, followed by Jordan in 1994. The English website of the Israeli daily Haaretz on Sunday quoted Sources close to EMG as saying "Egypt does not understand what it is doing. This move will bring back the country - politically and economically – by 30 years. This is a breach of the peace agreement with Israel."
