Netanyahu seeks to buy Palestinian gas

Israel proposes that negotiations include development of the Gaza Marine offshore natural- gas field and the Noa gas field offshore from Ashkelon, part of which is located in Palestinian waters.

March 6, 2011 23:06
2 minute read.
Flames from February attack on Sinai gas pipeline

Egypt gas pipeline blast 311. (photo credit: REUTERS)


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Prime Minister Binyamin Netanyahu has officially asked Palestinian Authority President Mahmoud Abbas to resume negotiations for Israel to buy Palestinian natural gas, people familiar with the matter told Globes. The approach was made a few days after an explosion on a pipeline in Sinai halted deliveries of Egyptian natural gas to Israel on February 5.

Israel proposes that negotiations include development of the Gaza Marine offshore natural- gas field and the Noa gas field offshore from Ashkelon, part of which is located in Palestinian waters. BG Group plc owns 60 percent of the Gaza Marine license; Consolidated Contractors Company, owned by Lebanon’s Houri family owns 30%; and the Palestinian Investment Fund owns 10%. Noble Energy Inc. owns 47% of the Noa license, and Yitzhak Tshuva-controlled Delek Group Ltd. owns the rest through subsidiaries Delek Investments and Properties Ltd., Avner Oil and Gas LP and Delek Drilling LP.

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No agreement was reached in two previous rounds of talks between Israel and the PA. The first round of talks began in 2000, shortly after BG Group discovered the gas field. Israel Electric Corporation wanted to buy gas from the reserves, but then-prime minister Ariel Sharon opposed a deal. Then-national infrastructures minister Yosef Paritzky supported a deal, arguing that Israel could not rely on Egyptian gas and needed a third supplier in addition to Delek Group and Noble Energy’s Yam Tethys reserves offshore from Ashkelon. Negotiations collapsed in 2005 after Paritzky was forced to resign in an embarrassing scandal.

The second round of talks began under prime minister Ehud Olmert but collapsed in 2007 in a dispute over prices.

The gap between Israel and the Palestinians was only $0.20, according to Hezi Kugler, who at the time was director-general of the National Infrastructures Ministry.

“I said at the time that Palestinian gas was the perfect mezzanine solution – in other words, an interim solution for 2011-13,” he told Globes Sunday.

“That is less relevant now because gas from Tamar will flow by then.”

The Marine Gaza field has an estimated 40 billion cubic meters of natural gas and would cost between $800 million and $1 billion to develop.

Development would take 30-36 months.

The Noa field has an estimated 7-8 of natural gas. It’s main advantage over the Marine Gaza field is its proximity to Yam Tethys, which already produces gas from the Mari B well. This proximity will reportedly enable development of the Noa field within a year from a decision to do so, at a relatively low cost of $200m.

Nobel Energy and Delek have refused to develop the field, saying it is not worthwhile.

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