Egypt to pay Israel USD 500 mn settlement to end seven-year gas dispute
DISPUTE WATCH- Egypt to pay Israel USD 500 mn settlement to end seven-year gas dispute: Egypt has agreed to pay USD 500 mn over 8.5 years to the Israel Electric Corporation (IEC) as a settlement for halting natural gas shipments in 2012, the Egyptian General Petroleum Corporation (EGPC) and EGAS said yesterday in a statement picked up by Reuters. Egypt agreed to the reduced fine in exchange for the IEC dropping its other claims that arose from an arbitration decision in 2015, when the International Chamber of Commerce ordered Egypt to pay USD 1.76 bn.
Background: The IEC admitted in April that it was willing to accept a USD 500 mn settlement, amounting to a USD 1.3 bn write-off of the original USD 1.76 bn fine. Egypt had appealed against the International Chamber of Commerce’s ruling, and made reducing the settlement a key condition for accepting a gas agreement with Israel. The two countries signed a USD 15 bn gas pact last year, which will see Delek Drilling and its partner Noble Energy supplying the Alaa Arafa-led Dolphinus Holding with 7 bcm of natural gas from Israel’s Leviathan and Tamar gas fields. Delek’s deputy CEO Yossi Gvura said earlier this month commercial sales of natural gas to Egypt could begin by the end of June. The gas dispute originates from 2012 when terrorist attacks in the Sinai resulted in the Egyptian government suspending shipments of natural gas to Israel.