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Egypt, Israel agree on $500 million fine to end gas dispute

Egypt reached a settlement agreement with state-owned Israel Electric Corp. to pay a reduced fine for halting deliveries of natural gas, ending a dispute that started about seven years ago.

The accord signed June 16 cuts the fine to $500 million from $1.7 billion after reaching “an amicable agreement” out of a “keenness to avail an environment attractive to investment,” Egypt’s oil ministry said Sunday in an emailed statement.

Israel Electric, the state-owned utility, had sued Egyptian state entities after Egypt broke a contract signed in 2005 to supply the fuel. Israeli officials at the time said the termination could damage peace accords between the two nations.

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Egypt ultimately canceled gas exports to Israel in 2012 after a section of a pipeline that connects the two countries was repeatedly attacked by militants and, with its own reserves dwindling, it diverted supplies for domestic use.

The fine will be amortized over 8 1/2 years and the National Bank of Egypt will issue a letter of credit.

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