Scrapping of Egypt-Israel gas deal not a political act: Netanyahu

Israel’s prime minister has played down Egypt’s sudden termination of a gas supply deal, saying it was a business disagreement, not a political act.

Benjamin Netanyahu said the cancellation of the contract supplying Israel with 40 per cent of its gas needs, announced on Sunday, resulted from a business dispute. Egyptian officials also said it was a trade issue, although there have been growing public calls for Egypt to review ties with Israel since the overthrow of Hosni Mubarak, for whom a peace treaty with Israel was a cornerstone of regional policy.

Egyptian politicians welcomed the move to end a deal heavily criticised even under Mr Mubarak. Opposition media and the public accused his government of giving Israel preferential pricing and using the deal to benefit his allies.

Israeli officials say gas has not flowed from Egypt to Israel for most of this year due to a series of attacks on the pipeline running through Egypt’s volatile Sinai peninsula. Israel has turned to more expensive fuel supplies and warned residents to expect power shortages this summer.

“We don’t see this cut-off of the gas as something that is born out of political developments,” Mr Netanyahu said. “It’s actually a business dispute between the Israeli company and the Egyptian company.”

Egypt’s state-owned EGAS confirmed the termination of the 20-year contract, which was agreed in 2005. It had supplied gas for the deal between another Egyptian firm, EMG, and Israel. Hussein Salem, a Mubarak associate, is a major shareholder in EMG.