After years of blocking, Israel backs Gaza offshore gas

Oct. 10, 2013 at 12:52 PM
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GAZA, Oct. 10 (UPI) -- After decades of stifling Palestinian efforts to develop Mediterranean natural gas fields off the Gaza Strip, the Israeli government is reported to be supporting the $1 billion project, which observers say could transform Palestinian aspirations for statehood.

It's part of a $4 billion U.S.-backed plan, unveiled in May by U.S. Secretary of State John Kerry, to end the Palestinians' crippling dependency on foreign aid and Israeli energy and promote a peace agreement.

Two fields, Marine 1 and 2, were discovered by British Gas in 2000, a year after the group and its partner, Consolidated Contractors International Co., based in Athens, Greece, were awarded a 25-year exploration license for the entire offshore sector by the Palestinian Authority.

BG Group held a 60 percent stake, CCC 30 percent and the PA's Investment Fund 10 percent.

BG said at the time the fields, 20 miles off Gaza, contained an estimated 1.4 trillion cubic feet of gas, then worth around $4 billion. Industry sources say with far larger fields found in Israeli waters to the north in 2009-10, the Gaza reserves are probably much higher than the initial estimate.

Israel's two biggest finds, the Tamar and Leviathan fields off the northern coast contain around 30 tcf, and further major strikes are expected.

The Financial Times reports Israeli Prime Minister Binyamin Netanyahu, who's been widely blamed for the failure of peace efforts by refusing to surrender the occupied West Bank, is "very supportive" of the gas project.

This would entail exploiting the gas fields on behalf of the PA by investors headed by Britain's BG Group, which made the initial discoveries.

If the project goes ahead, the fields could be producing by 2017, earning revenues of $6 billion-$7 billion a year, enough to transform the sagging Palestinian economy and, diplomats hope, help promote a peace deal.

The next step is obtaining permits from Israel, which the Palestinians say "could take a few weeks."

"We've been preparing ourselves, given the positive signals we received from the Israeli side, that they'd be willing to make the implementation of this project possible," a senior Palestinian Authority official told the Financial Times.

Despite optimism in some Palestinian circles, there's widespread skepticism about the hawkish Netanyahu's support for the gas project.

This is largely because of his track record of persistently refusing U.S. and European demands he halt Jewish settlement expansion in the West Bank and eventually withdraw from the occupied territory.

In 1999, the late Yasser Arafat, then the Palestinian president, hailed the gas strikes off Gaza "a gift from God." The project was abandoned when the second Palestinian intifada, or uprising against Israeli occupation, broke out in September 2000.

Israel's then-prime minister, Ariel Sharon, refused to allow the project to go ahead, claiming revenue from the gas production could be funneled to "terror groups."

He vowed "Israel will never buy gas from Palestine," and dropped strong hints that as far as the Israelis were concerned the Gaza gas fields belonged to the Jewish state, which conquered the Palestinian territories in 1967.

In 2007, the Israeli government of Prime Minister Ehud Olmert agreed to buy the gas from the PA, but sought to cut a deal with BG that would cut out the PA and the Hamas government that by then ruled the Gaza Strip.

Industry sources said the Israeli objective was essentially ti nullify the 1999 agreement between BG and the PA.

Under the proposed deal, the Palestinian gas was to be channeled via undersea pipeline to the port of Ashkelon in southern Israel, thus transferring control of the sale of the gas to Israel.

The negotiations collapsed in December 2007 and BG withdrew from the talks and closed its office in Israel.

On Dec. 27, 2008, a large Israeli military force invaded the Gaza Strip, ostensibly to crush Hamas.

The planning for Operation Cast Lead had been under way while the gas negotiations between BG and the Israeli government were being conducted.

Nafeez Mossaddeq Ahmed, executive director of the Institute for Policy Research & Development, based in London, whose work was used by the U.S. 9/11 Commission, wrote in November 2012 that "Operation Cast lead ... was directly, though not exclusively, motivated by Israel's concerns about the gas deal."

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