Egyptian court says no to gas exports to Israel

CAIRO Thu Dec 18, 2008 8:08pm GMT

CAIRO (Reuters) - A Cairo court on Tuesday overruled the Egyptian government's decision to allow exports of natural gas to Israel and said the constitution gave parliament the right to decide on sales of natural resources.

A senior Egyptian official said the verdict did not require immediate implementation and the government would appeal against it. Cabinet spokesman Magdy Rady said the government respected the judiciary but could not comment until it receives the ruling.

Judicial sources said the government could ignore the ruling, as it has done in many past cases, or postpone action by filing a countersuit challenging the decision.

Israel's Ministry of National Infrastructure said it was confident the political agreement covering the gas between the Egyptian and Israeli governments would remain in effect.

"The ... ministry has no doubt that deals between the Egyptian gas company and its customers in Israel remain valid. The ministry is convinced that the supply of gas from Egypt to Israel will continue as usual," it added.

Gas started flowing to Israel through a pipeline for the first time in May under an agreement signed in 2005 for the supply of 1.7 billion cubic meters a year over 20 years.

The group of lawyers who filed the suit against the government said the Israelis were buying the gas at prices below the international level. The Egyptian government is reluctant to reveal the price it receives for natural gas exports.

The Ministry of Petroleum and East Mediterranean Gas (EMG), the Egyptian gas exporting company, did not respond to requests for information on their plans.

The government never submitted the gas deal with Israel to parliament, arguing it was a private arrangement between EMG and the state-owned utility company Israel Electric Corp.

It said the matter was outside the court's jurisdiction, but the administrative court said it had the right to hear the case and that the executive should go to the People's Assembly (parliament) to obtain its agreement when it awards concessions for natural resources.

"That is a compulsory measure specified by the constitution and a basic condition for the action to be valid," the court said, quoted by the Egyptian state news agency MENA.

"(Parliament) is the body best qualified to monitor the actions of the administration with regards to granting concessions to exploit natural wealth," it added.

Some Egyptian leftists and Arab nationalists oppose in principle the sale of gas to Israel, which fought four wars with Egypt between 1948 and 1973 before making peace in 1979.

(Additional reporting by Joseph Nasr in Jerusalem; Writing by Jonathan Wright; Editing by Matthew Jones)