Egypt 'forced' to pay Israel half billion dollars over botched gas deal

Egypt will pay a $500 million settlement to Israel's state-owned electric corporation in compensation for losses that occurred after Cairo abruptly cut supplies of natural gas to Israel in 2012.

Egypt's petroleum and natural gas authorities made the announcement in a statement on Sunday, Reuters reported.

The statement said Cairo would pay the amount over a period of eight-and-a-half years in exchange for Tel Aviv to dropping all other claims resulting from an arbitration decision.

The payout relates to a 20-year energy supply agreement between Egypt and Israel that collapsed in after several attacks on pipelines delivering gas to Israel by militants.

Israel had previously relied on Egypt for roughly 40 percent of its gas needs.

Egypt and Jordan are the only Arab countries to have officially recognised Israel.