Egypt's state-owned gas company says it has scrapped a controversial deal which supplies Israel with 40% of its natural gas at lower than market prices.
Egyptian Natural Gas Holding Company (EGAS) complained it had not been paid by the Israeli-Egyptian firm that buys gas from Egypt and sells it to Israel.
Israel denied the claim and warned Egypt that it was violating an economic annex of their 1979 peace treaty.
Egypt's military rulers have not yet commented on the deal's cancellation.
The deal was widely unpopular in Egypt, but solidly backed by former President Hosni Mubarak who was forced to step down last February after mass protests.
Since then, the pipeline delivering gas from Egypt to Israel and Jordan has been bombed at least 14 times, reducing supplies significantly.
Gas deliveries to Israel dried up for a total of 225 days in 2011 and 66 days during the first three months of 2012, and ceased after an explosion on 5 March, according to Ampal-American Israel Corporation - a stakeholder in East Mediterranean Gas Company (EMG), which operates the cross-border pipeline.
The shortages have seen the state-owned Israel Electric Company increase rates by a third and warn of rolling blackouts this summer.
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