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News :: Human Rights |
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British firm negotiated with Israel for energy deal off Gaza coast |
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by nobloodforoil
(No verified email address) |
12 Jan 2009
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Negotiations for gas field off the coast of Gaza -
motive for Israel military incursions? |
Israel and BG in talks over Gaza’s gas field
Tamsin Carlisle
* Last Updated: July 27. 2008 12:59AM UAE / July 26. 2008 8:59PM GMT
One point in negotiations to tap the gas fields is whether Israel will
guarantee uninterrupted supplies to Gaza and the West Bank. Reuters
BG Group, the British gas producer, has resumed talks with Israel over
developing a gas field off the coast of Gaza, reviving plans to exploit
the territory’s only significant energy resource.
But while the stalled project may be inching closer to fruition, it still
faces extraordinary obstacles because of mistrust between the two
neighbours and disagreements over price.
“I expect it to be quite a long and drawn-out process,” said Frank
Chapman, the chief executive of BG, during a conference call to discuss
the company’s second-quarter results.
“The barriers relate to realism on the part of the Israelis regarding the
value of gas today.”
The Gaza Marine Field in the eastern Mediterranean Sea lies about 30
kilometres off the coast and contains around 1.3 trillion cubic feet of
reserves, worth an estimated US$4 billion (Dh14.7bn), making it a
significant potential source of exports and foreign currency for the
cash-starved Palestinian Authority. The project would take about four
years to develop.
BG won a majority stake in a concession to develop the Gaza field in 2000
and five years later was pursuing plans to sell the gas to Egypt. Pressure
from Tony Blair, then the prime minister of Britain, led the company to
reopen earlier failed negotiations with Israel for a pipeline development
that would land the gas at Ashqelon, a southern Israel coastal city with a
petroleum refinery. Israel broke off discussions at a time of heightened
tensions during the Palestinian Intifada.
But now Israel urgently needs gas to fuel an economy far bigger and more
industrially advanced than that in the Palestinian territories. BG, which
discovered the Gaza field, also struck gas off Israel’s coast in the 1990s
but those fields are smaller and have already been producing for several
years.
Israel recently began importing gas from Egypt to supplement its offshore
supplies. But the gas trade with a traditional political enemy is highly
controversial in Egypt, causing concerns in Israel about its vulnerability
to interruptions.
This gives the Jewish state a strong incentive for seeking to develop
alternative sources of gas. Stacked up against this is its political
reluctance to provide a source of funds for Hamas, following the
pro-Intifada movement’s 2006 election victory.
BG holds a 90 per cent interest in the project to develop the Gaza field.
That could drop to 60 per cent if the Palestinian Authority, which
controls project licensing, exercises its option to take a stake in the
development. The Palestinian Investment Fund (PIF), a financial holding
company owned mainly by independent Palestinian shareholders, holds 10 per
cent of the Gaza Marine project.
Under the terms of the proposed deal with Israel, the Gaza field would
supply Israel with about 10 per cent of its annual energy requirements and
would generate roughly $1bn of revenue for the PIF – currently the primary
vehicle for private investment in Palestinian infrastructure. Other terms
would need to include Israeli assurances of uninterrupted gas supplies
to Gaza and the West Bank and an uninterrupted flow of funds to
Palestinian stakeholders, but sceptics wonder just how ironclad such
assurances would be.
The project’s other big stumbling block is Israel’s reluctance to pay
anything close to market price for the Palestinian gas.
“We have not been able to agree on a suitable economic framework that
would support development of the gas field and the cost of imports into
Israel,” a BG spokesman said.
“Equally, there has not been very much engagement between the governments
of Israel and Gaza on issues such as fund flow and assurances of gas
supply to Gaza,” she said. “If BG is to develop the field, these issues
have to be resolved.”
In January, frustrated over the lack of progress, BG threatened to close
its Israeli office near Tel Aviv and to reopen negotiations with Egypt.
But BG said on Thursday it was not in talks with Cairo over alternative
markets for the Palestinian gas, which could be liquefied at Egyptian
facilities and shipped to Europe or North America.
That may be because Israel still exerts significant military control over
Gaza’s coastal waters under “interim” measures introduced in the 1990s.
: From TimesOnline.com May 23, 2007
:
: http://business.timesonline.co.uk/tol/business/industry_sectors/
: natural_resources/article1826739.ece
:
: BG Group at centre of $4bn deal to supply Gaza gas to Israel
: The British energy firm is set to agree terms of a $4bn, 15-year deal
: over gas discovered off the Gaza coast
:
: BG Group is poised to agree the terms of an historic $4 billion (�2
: billion) deal to supply Palestinian gas to Israel from a discovery off
: the Gaza coastline, The Times has learnt.
:
: Representatives from the British energy company are scheduled next week
: to meet a team of negotiators chosen by the Israeli Cabinet to thrash
: out a 15-year contract. Despite the violence in Gaza, the Israeli
: Foreign Ministry has insisted that it wants to conclude a deal �as soon
: as possible�.
:
: It would enable BG Group, the former owner of British Gas, to begin to
: develop an offshore field that is the Palestine Authority�s only
: natural resource. The move would mark an unprecedented milestone in
: Middle East relations. There would be enough gas to provide 10 per cent
: of Israel�s annual energy requirement, and the Palestinians would
: receive total royalties of $1 billion. Sources in the Middle East note
: that the sensitive talks could be derailed at any time by the acute
: political tension that surrounds the deal.
:
: However, Nigel Shaw, the BG Group vice-president in the region, said:
: �We are making progress. There are commercial issues to be completed
: and we also require bilateral agreement between the two governments to
: get this project across the line. But this is a chance for greater
: economic prosperity in Palestine and that is only good for peace.�
:
: The signing of heads of terms would mark an amazing turnaround, given
: the political and legal disputes that have dogged the project since BG
: Group discovered the Gaza Marine field in 2000. It holds one trillion
: cubic feet of gas, the equivalent of 150 million barrels of oil,
: equivalent to a large North Sea field.
:
: Six years ago Ariel Sharon, the Israeli Prime Minister at the time,
: vowed that Israel would never buy gas from its neighbour. The project
: also was held up by a legal challenge in the Israeli Supreme Court to
: establish whether the Palestinians had any right to the discovery. Last
: year BG Group was close to signing a deal to pump the gas to Egypt
: before Tony Blair intervened and asked the company to give Israel a
: second chance. Three weeks ago the Israeli Cabinet approved a proposal
: by Ehud Olmert, the Israeli Prime Minister, to buy gas from the
: Palestinian Authority. The Cabinet recognised the need for new energy
: sources to feed Israel�s rapidly growing economy.
:
: Under BG Group�s plans, gas from the field would be transported by an
: undersea pipeline to the seaport of Ashkelon. Although Israeli insiders
: are confident of a deal,significant questions remain, not least how
: payments to the Palestinian Authority will be made. Israeli defence
: authorities want the Palestinians to be paid in goods and services and
: insist that no money go to the Hamas-controlled Government.
:
: MORE:
: Consolidated Contractors International Company (CCC), one of the
: largest contractors in the Arab world. This Palestinian-owned company,
: with operates in almost every country in the Middle East and has an
: annual income that exceeds $2 billion (�1 billion), already has a large
: presence in Gaza and is a partner with the Palestinian Government in
: the main electricity-generating authority.
: http://business.timesonline.co.uk/tol/business/industry_sectors/
: natural_resources/article1826601.ece
:
: related: http://www.ccc.gr/
:
: |
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