mark turner : gaza’s offshore gas

– extracts from electronic intifada, January 23, 2008

Back in 2000, British Gas discovered proven natural gas reserves of at least 1.3 trillion cubic feet, worth nearly $4b, beneath Gazan territorial waters. BG won a majority stake in the concession to develop the Gaza Marine field, and originally targeted Egypt for the sale of the natural gas, but Israeli pressure led the company to redirect its efforts toward Israel, and develop plans for an underwater pipeline that would transport the gas to an Israeli refinery at Ashkelon. That deal could have eventually provided Israel with approximately 10% of its annual energy requirement, and would have generated approximately $1b for the Palestinian Investment Fund (PIF), which was set up in 2000 by Salam Fayyad, then IMF emissary to the PA, and by 2003 was valued at an estimated $1.3b. According to the deal with the PIF, BG owns 90% of the Gaza Marine license. Consolidated Contractors Company, a Palestinian-owned construction firm, owns the remaining 10%. The PA retains an option to take a stake in the concession once production is sanctioned.

The Hamas election victory in 2006 put all that in jeopardy, and Israel began stalling in its negotiations with BG. Hamas offered assurances that it would not interrupt the development of the project, but it reserved the right to renegotiate any parts of the deal it deemed harmful to Palestinian interests. In an interview with Dow Jones Minister of Economy Ziad al-Zaza reiterated Hamas’ opposition to any sale of fuel to Israel. In April 2007, the Israeli Cabinet reversed its earlier decision to prohibit the purchase of natural gas from the PA. In June 2007, Fayyad was appointed Prime Minister of the PA. In January 2008, BG announced it was pulling the plug on negotiations with Israel, due to the long impasse, planned to close its office near Tel Aviv, and was again considering Egypt as a buyer. The Egyptian option includes liquefying up to a third of the gas for export to the US and Europe. Regardless of the future of the Gaza Marine field, Gazans can be sure they will be denied any relief it might once have afforded them.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.