VZCZCXYZ0007
PP RUEHWEB

DE RUEHEG #2373 3231614
ZNR UUUUU ZZH
P 181614Z NOV 08
FM AMEMBASSY CAIRO
TO RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 0873
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1794
RUEHJM/AMCONSUL JERUSALEM PRIORITY 1083

UNCLAS CAIRO 002373 
 
SENSITIVE 
SIPDIS 
 
NEA/ELA FOR SCHALL 
 
E.O. 12958: N/A 
TAGS: ENRG PREL ECON IS EG
SUBJECT: EGYPTIAN COURT SEEKS TO END NATURAL GAS EXPORTS TO 
ISRAEL 
 
REF: A. CAIRO 419 
     ¶B. CAIRO 1359 
     ¶C. CAIRO 2257 
     ¶D. SIDEREAS-SCHALL EMAIL 11/2/08 
 
Sensitive but unclassified. Please treat accordingly. 
 
¶1. (SBU) The Administrative Court of Cairo ruled on November 
18 that ongoing natural gas exports to Israel should be 
halted because the export agreement between Egypt and Israel 
violates article 123 of the Egyptian constitution, pertaining 
to the protection and use of natural resources.  The court 
determined that the Ministry of Petroleum violated the 
Constitution by allowing the state-owned Egyptian General 
Petroleum Corporation (EGPC) and Egyptian Gas Holding Company 
(EGAS) to negotiate a gas export agreement with the Eastern 
Mediterranean Group Company (a private pipeline operator) and 
Israel in 2005 without the approval of the People's Assembly. 
 This decision was reached by a court of first review and may 
be appealed to the Supreme Administrative Court of Egypt. 
Contacts in the Ministry of Petroleum are not yet willing to 
discuss the verdict but a member of the public relations 
office told econoff that the case does not have sufficient 
merit to withstand an appeal before the Supreme 
Administrative Court. 
 
¶2. (SBU) According to Al Jazeera and Masrawy, an independent 
Egyptian electronic news service, the plaintiff, retired 
Egyptian ambassador and lawyer Ibrahim Yousri, filed this 
lawsuit because the terms of the export agreement were overly 
favorable to Israel and financially disadvantageous to Egypt. 
 Masrawy reported that Yousri is affiliated with a citizens' 
group opposed to gas exports to Israel led by Mohamed Anwar 
el Sadat, former member of the People's Assembly and nephew 
of assassinated president Anwar el Sadat. 
 
¶3. (SBU) The exact price of Egyptian gas per MMBTU to Israel 
is not known but industry contacts told econoff that it is 
likely under $1.50 per million British Thermal Units (MMBTU). 
 Egyptian gas exports to Israel have been controversial since 
news of the deal became public (refs A-C) and criticism 
intensified when world prices for natural gas skyrocketed to 
$13 per MMBTU in the spring of 2008.  Prime Minister Nazif 
and Petroleum Minister Fahmy have frequently repeated since 
September that the Ministry of Petroleum was renegotiating 
all export contracts. The Egyptian press reported recently 
that the GOE had succeeded in increasing the price per MMBTU 
for its liquefied natural gas (LNG) exports to Gaz de France 
and Union Fenosa of Spain to $3.12 per MMBTU from $1.78 (ref 
D). 
 
¶4. (SBU) COMMENT: We expect that the Ministry of Petroleum 
will appeal this decision to the Supreme Administrative 
Court. We do not anticipate that gas exports will be halted 
pending the appeal and will continue to monitor the situation. 
SCOBEY