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Analysis: Egypt may solve Gaza energy woes

By DEREK SANDS, UPI Energy Correspondent

CAIRO, Oct. 9 (UPI) -- While offshore Palestinian gas deposits sit idle and the Gaza Strip remains almost completely without electricity after Israel bombed the only Gaza power plant in June, Egypt has appeared as the potential answer to Gaza's energy woes.

Natural gas reserves confirmed off the coast of the Gaza Strip in 2000 could provide a much-needed source of revenue to the economically beleaguered Palestinian Authority, but the development of those reserves has been hindered by the ongoing friction between Israel and the Palestinian government.

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Meanwhile, Israel's blockade of the Gaza Strip after an Israeli soldier was captured in June has devastated the economy there, and the bombing of the area's only electrical power plant has left Gaza largely without power or water.

But reports in early September indicated that Egypt would supply electricity to Gaza from El Arish in the Sinai, and Egypt has also emerged as the most likely customer for the Gaza Marine natural gas reserve.

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The multinational natural gas giant British Gas Group signed a contract with the Palestinian Authority in 1999 to develop the 1 trillion cubic foot reserve, with Israel a likely customer. However, over the past year negotiations with Israel have failed, and British Gas has turned to Egypt.

The "preferred option" for British Gas now is to deliver the gas to Idku, in Egypt, for conversion to liquefied natural gas, Petrina Fahey, a spokesperson for British Gas, told United Press International.

Meanwhile, an Egyptian-Israeli consortium has been planning an 80.8-mile pipeline from Sinai to Ashkelon, in Israel, to help satisfy Israel's growing demand for natural gas, which is expected to reach 282.5 billion cubic feet per year by 2010, according the U.S. Energy Information Administration, the Department of Energy's data arm.

Some analysts have estimated that once the gas starts flowing from the offshore Gaza reserves it could mean about $50 million in tax revenue for the Palestinian Authority. Israel may, however, make it difficult for the PA to sell that natural gas, experts told UPI.

''Under the present conditions and with the presence of a Hamas government, Israel has been attempting to make life harder on ordinary Palestinians with the effect of making them come to the conclusion that Hamas and a Hamas government results in greater hardship for Palestinians," according to Samer Shehata, a professor of Arab politics at Georgetown University in Washington. "Therefore, I would not be surprised in the least if Israel attempts to complicate trade -- of any commodity -- between Gaza and Egypt."

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Nor will Israel easily give up control of electrical supplies to Gaza.

"Controlling energy -- like controlling water, or taxes, for that matter -- is a source of power and leverage. Therefore, and in line with previous Israeli action, I would also not be surprised if Israel had an interest in controlling electric power in and into Gaza," Shehata said.

The conservative Heritage Foundation's James A. Phillips, an expert on Middle East security issues, agrees.

''For both Israel and Egypt, selling electricity to Gaza provides economic benefits and possible political leverage,'' he said.

''Tensions along the border will undermine the certainty of supply of electricity for Gaza. As long as rockets are being launched from Gaza, Israel will have an interest in limiting what goes into Gaza, including electricity,'' Phillips said.

In response to the June capture of Israel Defense Forces Cpl. Gilat Shalit by militants, Israel closed border crossings into Gaza, saying it was to stop the soldier from being taken out of the territory.

The closure shut down the Palestinian economy. The United Nations described the economy as ''near total collapse,'' and the U.N. World Food Program has said that without international food aid, 70 percent of the people in Gaza would perish.

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Since Hamas won a majority in the January 2006 parliamentary elections, Israel has refused to do business with the Palestinian Authority, saying it was concerned that the money would finance terrorism. The United States and the European Union have made similar moves.

Hamas has refused to recognize Israel and to disavow violence, two conditions demanded by Israel, the United States and the European Union before aid will begin to flow again.

Shalit's capture led to the Israeli bombing of a 140 megawatt electrical power plant in Nusseirat, Gaza, which was responsible for half of the area's electricity, leaving only the power Israel supplies across the border, and generator power.

Commissioner General of the U.N. Relief Works Agency for Palestine Refugees in the Near East Karen Abu Zayd said on Sept. 7 that the Organization for the Petroleum Exporting Countries had committed to repairing the plant, but that it would take at least 18 months.

Amid pressure from outside Gaza and the West Bank, internal pressures last week have led to clashes between the Fatah party of President Mahmoud Abbas and Hamas, which controls the parliament. Abbas warned earlier in the week that Palestine could be headed toward civil war.

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The ongoing conflict between Israel and the Hamas-led government, as well as between Hamas and the Fatah party has set the stage for almost consistent unpredictability, especially concerning power to Gaza, according Randa Alami, who wrote a comprehensive analysis of the Egyptian gas sector for the Oxford Institute for Energy Studies.

''Whether commercial options or long-term plans are being considered, supply disruptions are now built into expectations,'' Alami said.

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(Comments to energy@upi.com)

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