Eight oil ministry officials arrested in Egypt over gas sales to Israel

April 22, 2011
Sarah Benton
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ynetnewsEgypt detains ex-minister over gas deal
Sameh Fahmi to remain in custody for 15 days over allegations of wasting public money, harming country’s national interest by supplying Israel with gas at rates far below market prices
News agencies

Egypt’s prosecutor general on Thursday ordered Sameh Fahmi and seven other former Oil Ministry officials to remain in custody for 15 days pending further investigation.
Prosecutors questioned them for hours about the much-criticized gas deal which the prosecutor general said has cost Egypt millions of dollars.
The contracts have come in for renewed criticism following the ouster of former President Hosni Mubarak, with critics pointing to the deals as an example of the cronyism prevalent in the former government.
Israel gets 40% of its natural gas from Egypt under an arrangement put in place after a 1979 peace deal.
Opposition groups have long complained the gas was being sold at preferential prices and that East Mediterranean Gas (EMG), the company which supplies it, violated bureaucratic regulations.
A statement from the prosecutor’s office said the deal involved selling gas to Israel at prices way below market rates, which incurred losses worth over $714 million to the state.
The prosecutor said the officials would be questioned on allegations that included profiteering, squandering national wealth and harming Egypt’s national interests.
Egypt’s new government has said it would review natural gas contracts with other states, including Israel and Jordan, which could boost the government’s income by $3-4 billion.
The prosecutor also ordered the detention of one of Mubarak’s close associates, Hussein Salem, a major shareholder in EMG and a former intelligence chief. It was not immediately clear if Salem had fled Egypt after the uprising.
Newly appointed Petroleum Minister Abdullah Ghorab said last month that Egypt was trying to amend gas export deals with a number of countries, particularly Israel. He said public disapproval of the gas exports was sufficient reason to negotiate better terms.
Previous governments had insisted the natural gas deals were fair.
Egypt is a modest gas exporter, using pipelines to export to Israel, Jordan and other regional countries. It also exports liquefied natural gas via facilities on its Mediterranean coast.
The Associated Press and Reuters contributed to this report

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