Israel Lets Egypt off Gas Debt

State Israel Electric Corp will waive $1.3bn of debt owed by Egyptian gas companies, the company said in a filing to the Tel Aviv Stock Exchange (TASE). The company said it is in "advanced negotiations with respect to a compromise agreement with the Egyptian gas companies. Its main points are that IEC will be paid $500mn during an eight and a half year period (of which $60mn will be paid on the date of completion of the agreement)."

The concession by Israel had been expected for a long time but has only now had the formal seal of approval. The agreement was negotiated between the two governments, not the companies involved, as the two countries sought ways to improve relationships and Egypt wanted to jump-start energy co-operation between the two.

Last year Tamar Partnership and Leviathan Partnership signed multi-billion gas sales and purchase agreements with Egypt's Delphinus Holdings which depended on IEC conceding the debt.

The International Chamber of Commerce ruled that Egypt should compensate Israeli firms for cancelling a gas supply agreement with IEC. At the time Egypt was governed by the Muslim Brotherhood's Mohmed Morsi, following the ouster of former president Hosni Mubrak during the Arab Spring. The ICC ruled that the IEC should be paid $1.76bn and EMG should be paid $288mn.