Cairo is prepared to resume gas exports to Israel at a new price, an Egyptian minister said Monday, after cancelling a long-term deal that could have strained the already troubled diplomatic relations between Tel Aviv and Cairo, dpa reported.
"Egypt has no objections to reach a new contract with new conditions and new prices," Minister of International Cooperation Fayza Abul-Naga was quoted by state media as saying.
Abul-Naga said that the contract was a business deal, and that the other side was notified five times for not meeting its financial obligations, and that the last chance for payment was on March 31.
Egypt's Natural Gas Holding Company said on Sunday it had terminated a contract with East Mediterranean Gas (EMG), a joint Israeli-Egyptian firm that operates a natural gas pipeline between the two countries, because EMG had failed to honour the contract.
Israel said the Egyptian decision was a business dispute, as it appeared to downplay the fallout of the move on its troubled diplomatic relations with Cairo.
"We don't see the gas cancellation as resulting from political developments," Prime Minister Benjamin Netanyahu said in a statement. "It is in fact a business dispute between the Israeli company and the Egyptian company."
The cancellation of the 20-year-old deal under which Egypt supplies Israel with some 40 per cent of it natural gas needs was a further blow to strained relations between the two neighbours who signed a pioneering peace deal in 1979.
Relations deteriorated after last year's resignation of former president Hosny Mubarak, who made peace with Israel and an alliance with the United States the pillars of his almost 30-year reign.
Netanyahu echoed remarks by Israeli Foreign Minister Avigdor Lieberman, who had said he hoped the issue would be resolved "like any commercial disagreement, without taking on political dimensions."
Lieberman, however, said the cancellation was "not a good sign."
"It is certainly an important commercial agreement, which expresses the stable relations between the two states," he told Israel Radio. "Israel is interested in keeping the peace agreement and we think this is also in Egypt's highest interest."
Israel has been closely watching events in Egypt, fearing that Islamists who won a parliamentary vote could push for the cancellation of the 1979 peace treaty.
The peace treaty and gas agreement are highly unpopular in Egypt, where anti-Israel sentiment runs high.
Some in Egypt say the gas deal was sealed by a Mubarak aide at below-market price.
The pipeline through the lawless Sinai Peninsular has been blown up several times since Mubarak's fall.