"EMG's equipment is undamaged. After the pipeline cools, it will take an estimated two weeks to repair the damage, and we can resume gas deliveries to Israel Electric Corporation (IEC) (TASE: ELEC.B22), Oil Refineries Ltd. (TASE:ORL), Makhteshim Agan Industries Ltd. (TASE: MAIN), and Nesher Israel Cement Enterprises Ltd." Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) CFO and SVP finance Irit Eluz told the company's bondholders today, in response to yesterday's attack on the gas pipeline in Sinai, which resulted in the suspension of gas deliveries to Israel and Jordan.
Eluz added, "EMG is an Egyptian company that has supplied natural gas to Israel since 2008. It is one of Israel's two suppliers, providing 40% of the country's gas. Annual turnover will reach $1 billion in the future. There have been several incidents in recent months: the stoppage of deliveries in February, which resumed in March until yesterday morning. This time it was 20 kilometers westward and gas flow to Israel and other countries in the region was halted."
Ampal, controlled by chairman Yosef Maiman, owns 12.5% of East Mediterranean Gas Company EMG). Israel's other natural gas supplier is Yam Tethys, owned by Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL), who also own most of the Tamar and Leviathan gas fields, which will replace Yam Tethys when it runs out.
Asked about the likelihood that EMG's contracts with Israel would be cancelled, Eluz said, "The agreement with EMG is anchored in the peace treaty and its appendix. It is an important economic need for Egypt, generating $1 billion in annual revenue and we have the support of the Americans at the same status.
"It hard for us to imagine a scenario in which Egypt foregoes this money, especially in its current circumstances, regardless of who is in power. This is especially true now, as the chaos increases, so does their need for this money, and we don’t see them foregoing it. Egypt's petroleum and other ministers have said that they will keep the agreements with Israel, including this agreement."
Asked if there was a remedy if the agreement was cancelled, Eluz said, "No, but there is international law because it would be a breach of the peace treaty."
Asked about the investigations in Egypt over the alleged low price Israel pays for the natural gas, Eluz said, "We pay the highest price in Egypt - no one pays more than us. Ampal certainly won't be named in an investigation. EMG was founded in 2000 and the agreement was only signed in 2005 after obtaining all the permits. This isn't a hasty agreement but an agreement between governments and IEC. The Supreme Court approved the agreement. The company operates legally. I am not responsible for [former Egyptian President Hosni] Mubarak and [his son] Gamal, and I have no idea what they are under investigation for."
Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011