Egypt Terminating Gas Contract with Israel

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JERUSALEM, Israel -- Egyptian Natural Gas Holding Company (EGAS) officials said Monday the company is terminating its contract with Israel.

Company head Mohamed Shoeb and executive director Hani Dahi both said the decision was based on Israel's failure to transfer payment and not on political considerations, reports said.

Israeli Prime Minister Benjamin Netanyahu responded to the announcement at a meeting with Israel Bonds leaders Monday afternoon.  

"We don't see this cutoff of the gas as something that is born out of political developments. It's actually a business dispute between the Israeli company and the Egyptian company," Netanyahu told meeting participants.

"But alongside that I have to say that we have, as I said, the reserves of gas to make Israel totally energy independent -- not only from Egypt but from any other source -- and to have Israel become one of the world's large exporters of natural gas. So we're quite confident on that score," he said.

Netanyahu was referring to an announcement last spring of a huge gas field off Israel's northern coast. In addition to that discovery, Israeli scientists have been investigating massive deposits of oil shale, which some believe may be equal to Saudi Arabia's oil reserves.

Earlier Monday, Foreign Minister Avigdor Lieberman told Israel Radio both countries have an interest in maintaining the peace agreement. Lieberman said he hoped "everything will work out for the best."

But despite saying the decision is not politically based, some believe it doesn't bode well for upholding the 1979 Israeli-Egyptian peace accord.

Since the Mubarak government fell 15 months ago, the pipeline has been blown up 14 times, allegedly by Bedouins who claim the pipeline was built on their land and they've never been compensated.

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