CAIRO — Egypt said Monday that it had struck a deal with Israel to settle a fine for halting deliveries of natural gas.
A statement from Egypt’s Petroleum Ministry said the settlement deal, which was signed Sunday, would reduce the $1.7 billion fine to $500 million.
It said Egypt will pay the amount to the state-owned Israel Electric Corporation over eight and a half years.
In return, the Israeli company will drop other claims resulting from a 2015 arbitration decision by the International Chamber of Commerce.
Israel Electric had sued the state-owned Egyptian General Petroleum Corporation and Egyptian Natural Gas after a 2005 deal to export natural gas to Israel collapsed in 2012 amid jihadist attacks on a pipeline in the Sinai Peninsula, where Egypt has been battling insurgency for years.
Israel relied on the pipeline to meet its energy needs.
Last year, US-Israeli consortium Noble Energy, which leads the development of Israel’s offshore gas reserves, together with its Israeli partner Delek and Egyptian East Gas Company, announced a deal that would enable the export of natural gas to Egypt.
The consortium paid $518 million to buy 39 percent of a disused pipeline connecting the Israeli coastal city of Ashkelon with the north Sinai. The mainly undersea pipeline is now used to transport natural gas from the Tamar and Leviathan reservoirs to Egypt.
It is the first time Egypt, which in 1979 became the first Arab country to sign a peace treaty with Israel, imports gas from its neighbor.
Israel has limited natural resources, but in the past few years it has discovered major gas fields off its coast and is building the infrastructure needed to tap them.
Tamar, which began production in 2013, has estimated reserves of up to 238 billion cubic meters (8.4 trillion cubic feet).
Leviathan, discovered in 2010 and set to begin production in late 2019, is estimated to hold 535 billion cubic meters (18.9 trillion cubic feet) of natural gas, along with 34.1 million barrels of condensate.
Israel hopes its gas reserves will give the country energy independence and the prospect of becoming a supplier for Europe as well as forging strategic ties within the region.