Energy company Ampal-American Israel Corp has filed for Chapter 11 bankruptcy protection, citing losses caused by a halt in Egyptian gas supplies to the Jewish state, business daily Globes said Thursday.
Israel's Ampal seeks Chapter 11 over Egypt gas loss
Ampal, which owns 12.5 per cent of EMG, the company in charge of delivering Egyptian natural gas to Israel, files for bankruptcy due to drop in its revenues following the deal's cancellation in April
AFP, Thursday 30 Aug 2012
Ampal, controlled by Israeli businessman Yosef Maiman and which owns 12.5 per cent of Israeli-Egyptian consortium East Mediterranean Gas (EMG), filed its application on Wednesday with the US Bankruptcy Court for the Southern District of New York, the Israeli newspaper said.
In April, Egypt scrapped its gas supply deal with EMG, signed under the rule of ousted President Hosni Mubarak, citing what an official called the consortium's failure "to respect conditions stipulated in the contract."
The sale of gas to Israel, which signed a 1979 peace treaty with Egypt, has always been controversial in the Arab world's most populous country. It was the largest trade deal between the two former foes.
The pipeline supplying Israel and Jordan, which crosses the troubled Sinai peninsula, has been hit by bomb attacks 15 times since the uprising which toppled Mubarak in February 2011.
"In December 2011, Ampal announced that it could not meet its debt payments," Globes said.
Exports to Israel began in the spring of 2008, in accordance with a deal signed three years earlier which came in for heavy criticism from Egypt's Muslim Brotherhood, which subsequently won elections after the fall of Mubarak.
Under the 15-year deal worth $2.5 billion, EMG was to sell 1.7 billion cubic metres a year.
Globes said that Ampal's share price on the Nasdaq in New York fell 78.5 per cent on Wednesday to $0.60. According to the website of the Tel Aviv Stock Exchange, as of 2:05 pm (1105 GMT) it had fallen 35 per cent to 7.20 shekels ($1.79).
According to Globes, Ampal said it had been trying to negotiate agreement with its bondholders for eight months, and had submitted several proposals, the latest of which was published on July 17 and amended on July 30.
Israel generates 40 per cent of its electricity from natural gas and until last year, Egypt provided 43 per cent of its gas supplies.
In the absence of Egyptian gas, Israel has been pushing for the speedy exploitation of several recently-discovered gas fields off its northern coast.