JERUSALEM: East Mediterranean Gas (EMG) has filed a request for international arbitration in the wake of a series of gas disruptions from Egypt, an EMG stakeholder said on Sunday.
Ampal-American Israel Corp, which owns 12.5 percent of East Mediterranean Gas (EMG), said EMG seeks to begin arbitration hearings against Egyptian General Petroleum Corp and Egyptian Natural Gas Holding Co (EGAS) through the International Chamber of Commerce.
EMG is seeking compensation from Egypt for damages resulting from contractual breaches, Ampal said in a statement to the Tel Aviv Stock Exchange.
"Ampal, as well as other international shareholders, are determined to pursue every available avenue to secure the smooth operation of EMG," said Yosef Maiman, chairman, president and chief executive of Ampal.
In July, an EMG board member told Reuters that shareholders in the company were seeking $8 billion in damages to EMG and its clients from contract violations in gas supplies.
"EMG is pursuing all legal options whether it’s by shareholders or by the company," a source close to EMG told Reuters.
Israel relies on Egypt for more than 40 percent of gas needs to Israel’s electric utility but supplies have been cut off a number of times this year due to attacks on the pipeline — run by EGAS — that also supplies gas to Jordan. The last attack came on Sept. 27.
The attacks are believed to be from militants opposed to selling Egyptian gas to Israel.
EMG is also 12.5 percent owned by Merhav which is held by Maiman while other stakeholders in EMG include Egyptian businessman Hussein Salem, Egypt Natural Gas Co, Thailand’s PTT and U.S. businessman Sam Zell.
"Ampal, as well as other international investors, have invested a substantial amount of money in EMG through direct investments and in EMG’s shares," Maiman said.
Egypt’s new government has also been trying to amend its contracts with Israel and Jordan following complaints that prices fixed during former president Hosni Mubarak’s rule were below market rates.
"We hope that the government of Egypt and the Egyptian state-controlled gas supplier elect to honor the obligations under the gas sale and purchase agreement," Maiman said. "However, we will continue to take all necessary actions to protect our investments."
The gas disruptions have already caused financial harm to state-owned Israel Electric Corp, which has had to switch to more expensive fuel to generate electricity.
