British Gas to arrive to complete sale talks

The natural gas field off the Gaza coast contains at least 37 billion cubic meters of natural gas. British Gas owns 90% of the reserves, with the remaining 10% held by the PA and a Lebanese company owned by the Khouri Family of Beirut.

By YA'AKOV HECHT, THE BUSINESS POST
January 17, 2007 07:16
2 minute read.

A delegation of senior executives from British Gas, the UK-based gas and energy concern, is set to arrive in Israel shortly, in order to complete negotiations with the government to sell Israel natural gas. British Gas owns rights to natural gas reserves located off the Gaza Strip coast. Over the past two months, considerable progress has been made in negotiations between representatives of the Finance Ministry, National Infrastructure Ministry and Israel Electric Corporation (IEC), and British Gas to purchase the natural gas. In mid-December, the government's negotiating team, led by former Finance Ministry director general Yossi Bachar and National Infrastructure Ministry Director General Hezi Kugler, traveled to London. At meetings held with senior executives at British Gas, a breakthrough was achieved regarding the price at which the natural gas would be bought, and other terms of the contract. According to the agreement taking shape between the two parties, the Israeli government would purchase the natural gas from British Gas at a price ranging between $3.80-4.10 per million BTUs (British Thermal Units, the natural gas unit of measurement). The natural gas would be purchased pursuant to supply contracts signed with natural gas consumers in Israel, including the IEC, which is slated to be the largest consumer of the natural gas, and a host of industrial plants. Over the past four years, negotiations between the government and British Gas have had their ups and downs, and at a certain stage officials at the British concern considered halting them and marketing the natural gas from the field off the Gaza coast to Europe, through Egypt. The natural gas field off the Gaza coast, known as Gaza Marine, contains at least 37 billion cubic meters of natural gas. British Gas owns 90% of the reserves, with the remaining 10% held by the Palestinian Authority and a Lebanese company owned by the Khouri Family of Beirut. During the negotiations, there was some criticism voiced in Israel regarding the need for purchasing natural gas from a reserve in which the PA is a partner. That stemmed from the concern that money paid for natural gas purchases from the Gaza Marine field would reach Palestinian terrorist groups. Several weeks ago, MK Gilad Erdan (Likud) sent a letter to the finance and national infrastructure ministers, with a demand that the negotiations with British Gas not be completed until suitable guarantees were obtained that purchase funds would not reach hostile terrorist elements. Completing the negotiations with British Gas would ensure an additional source of natural gas supply for consumers in Israel. The EMG Group, owned by businessman Yossi Maimon and Egypt's national oil company, is supposed to supply natural gas to the IEC. The Yam Tetis consortium, owned by the Delek Group and US-based Noble Energy, Inc., has already signed a series of contracts for the supply of natural gas from the gas field that was discovered off the Ashkelon coast.


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