Fifth attack on Egypt’s gas pipeline to Israel and Jordan

13 July 2011

Fourth bombing since February has repercussions for gas importers and Egypt

The pipeline transporting gas from Egypt to Israel and the Levant has been attacked a fifth time since the popular unrest toppled former president Hosni Mubarak in February.

The bombing of the East Mediterranean Gas (EMG) pipeline occurred on 12 July near the town of Al-Arish, cutting the supply. It will keep the pipeline, already delivering at reduced capacity after being damaged in an earlier attack on 4 July, from coming back online at the scheduled date. The pipeline was first attacked on 5 February; four of the attacks have led to a disruption in the supply.

Israel receives 40 per cent of its gas from Egypt through the pipeline, which used to deliver up to 80 per cent of gas used in Jordan. There have been reports that Jordan has not been receiving any gas from Egypt over the past weeks as the result of the bombings. The pipeline extends to the Levant countries of Syria and Lebanon.

For Egypt, the attack is further complicated by the decision of EMG shareholders, including the Merhav Group and Thailand’s PTT, to sue the government for compensation at the Paris-based International Court of Arbitration.

Merhav Group’s senior vice-president, Nimrod Novik, was on 11 July quoted as saying that “the investors plan to seek more than $8bn in damages.”

A lawsuit could have serious repercussions on the perception of Egypt as a business-friendly country and undermine foreign investment in the new democracy.

“An investor dispute in international courts might prove damaging at a time when the international business community is trying to assess the emerging Egyptian political leadership’s sense of responsibility for adhering to contracts and its business friendliness,” says Samuel Ciszuk, energy analyst at US consultancy IHS Global Insight.

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