The gas supply to Gaza gas stations has been cut off for three days. Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) stopped supplying gas to gas stations in the Gaza Strip subsequent to the Hamas takeover and the chaos that ensued. For the time being, Dor Alon continues to provide gas only to the power station in Gaza, which produces one third of the area's electricity.
The cessation of gas sales to Gaza was done in coordination with the IDF and the defense establishment. The border crossings to Gaza have been closed since the middle of last week after the Hamas conquest began.
Dor Alon continues to wait for further directives from the government and the defense establishment regarding continued provision of gas to Gaza. A meeting is due to take place this week in the Ministry of National Infrastructures to discuss the matter. Minister of National Infrastructures Benjamin Ben Eliezer has already expressed his opinion that the Hamas must be pressured without causing a humanitarian crisis.
Until early 2007, Dor Alon had been the exclusive gas provider to the Palestinian Authority (PA). Earlier this year Paz Oil Company Ltd. (TASE:PZOL) began providing gas to Judea and Samaria while Dor Alon continued to service Gaza. Dor Alon's contract is with the PA, therefore if the Hamas remains in power it is not clear whether the company will be able to continue to sell to Gaza.
Dor Alon reported sales of NIS 1.7 billion to the PA during the first 9 months of 2006. Sales to the PA, Gaza and the West Bank, comprised 40% of the company's total gas sales. It is believed that sales to Gaza comprised one third, or NIS 600-700 million, of the company's total gas sales to the PA. However, the profitability of sales to the PA was minimal, so its stoppage will not have a material effect on the company.
Published by Globes [online], Israel business news - www.globes.co.il - on June 17, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007