Egypt’s Natural-Gas Pipeline to Israel, Jordan Struck by Double Explosion

A pipeline transporting Egyptian natural gas to Israel and Jordan was damaged by two explosions, forcing a halt in exports of the fuel in the seventh such attack since February, Egypt’s Oil Ministry said.

The flow of gas to Israel stopped at about 5 a.m. Jerusalem time, Maya Etzioni, a spokeswoman for Israel’s Ministry of National Infrastructures, said today by mobile phone. Shares in Ampal-American Israel (AMPL) Corp., which owns 12.5 percent of East Mediterranean Gas Co., the Israeli company importing Egyptian gas, dropped 6.6 percent to 1.507 shekels at the 4:30 p.m. close in Tel Aviv.

“A group of terrorists” set off the overnight blasts in the northern Sinai desert, causing a suspension of exports and interrupting some domestic supplies, the Egyptian ministry said in an e-mailed statement.

The explosions underscore Egypt’s challenge in securing the pipeline and threaten to worsen its already soured ties with its eastern neighbor. The North African country, holder of the continent’s third-largest gas reserves, supplied Israel with about 40 percent of its gas needs before an attack in July on the same network.

Assessing Damage

Masked gunmen in two vehicles drove to the site of the blasts at about midnight, an hour before the first of the explosions at a facility in the Sinai town of Bir El Abd, Egypt’s official Middle East News Agency reported. A second blast occurred at an installation west of nearby El Arish, the capital of North Sinai province, the agency known as Mena reported, citing unidentified eyewitnesses.

Egyptian authorities closed valves on the pipeline to stop fuel from flowing after a fire broke out at the network near El Arish, Mena said. No one was hurt, the Cairo-based agency said.

Officials are assessing damage from the attacks, the Oil Ministry said, without giving a date for a possible resumption in supplies.

Egypt last suspended fuel exports to Israel after saboteurs blew up a pipeline facility on July 12. It restored gas flows to Israel and Jordan in October, Hassan al Mahdi, chairman of pipeline operator Egyptian Natural Gas Holding Co., told reporters on Oct. 24. Gunmen first attacked the network Feb. 5.

`Terrible Shape'

“The continual pipeline bombings are going to make both Israel and Jordan think more seriously about diversifying their energy supplies, since the Egyptian gas is now clearly an unreliable source,” Mark Heller, a research fellow in regional politics at the Institute for National Security Studies at Tel Aviv University, said in a phone interview. “Most of all, it hurts Egypt itself. It’s in terrible economic shape, and a loss of gas revenue doesn’t help.”

Relations between Israel and Egypt have chilled since the January uprising that overthrew Egyptian President Hosni Mubarak, straining a three-decade peace treaty between the countries. Egypt’s ruling military council declared a state of emergency to restore order after protesters in Cairo attacked the Israeli embassy on Sept. 9, forcing an evacuation of diplomatic personnel.

East Mediterranean Gas has filed a request for arbitration with the International Chamber of Commerce seeking compensation from Egyptian General Petroleum Corp. and Egyptian Natural Gas Holding for damages incurred as a result of contractual breaches, Ampal said on Oct. 9.

“Egypt’s going to have decide if it wants to establish control over Sinai, which means getting into a fight with Bedouin smugglers, Palestinians and radical Islamic elements,” said Heller, the research fellow. “This could be a serious problem for the government.”

Editors: Bruce Stanley, Rob Verdonck

To contact the reporter on this story: Ola Galal in Cairo at ogalal@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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