Israeli company writes off stake in Egyptian gas

An Israeli company has written off its entire 12.5 per cent investment in the company that sold Egyptian natural gas to Israel before Egypt terminated the exports.

Ampal-American Israel Corp. said this week that the scrapping of the deal and uncertainties in Egypt led to its decision to consider that its holding in East Mediterranean Gas has no value.

A spokesman for EMG, the joint venture that operates the pipeline between the two countries, could not immediately be reached for comment on Wednesday.

Egypt terminated its 20-year gas deal with Israel last month, saying the Israelis hadn't paid their bills. Israel says it halted the payments because repeated attacks by militants on the gas pipeline in Egypt's Sinai desert had all but cut off gas shipments for the past year.

The attacks multiplied after longtime Egyptian President Hosni Mubarak was toppled in a popular uprising last year. Ampal has sued the Egyptian government over the disrupted gas supply.

Ampal said it recorded charges of $260.4 million in the first quarter of 2012 in connection with its stake in East Mediterranean Gas.

On Monday, Ampal reported a first-quarter net loss of $215 million, compared with a net profit of $17.2 million a year earlier.

Israel and Egypt signed their gas deal in 2005. For many Egyptians, that deal typified the close ties Mubarak forged with Israel and how his associates benefited greatly from such business deals.

Critics charge that Israel got the gas at below-market prices — a charge Israel denies — and that Mubarak's cronies skimmed millions of dollars off the proceeds.

Israel had relied on Egypt for 40 per cent of its natural gas, and viewed the deal as a key component of its peace agreement with Egypt, its first with an Arab country.