Talks underway for agreement on offshore Gaza gas field

Gaza Strip credit: Shutterstock
Gaza Strip credit: Shutterstock

The Palestinian Authority, Israel and Egypt are in negotiations to move forward on starting to develop the Marine gas field.

The Palestinian Authority, Israel and Egypt are in negotiations to move forward on starting to develop the Marine gas field, offshore from Gaza, with assistance and mediation from the US and EU. According to reports, Egypt is behind the initiative. Sources involved in the matter have told "Globes" that Israel sees the process positively and that Marine could help supply the Gaza power station with natural gas and generate revenue for the Palestinian Authority.

A senior source in Cairo told "Globes" that as part of its focus on regional gas production and as a mediator between Israel, the Palestinian Authority and Hamas, Egypt sees the development of Marine as a positive step. The Egyptian source said that such a step would reduce dependence on imported diesel and provide thousands of jobs for Gazans.

In February 2021, the Palestinian Authority and Egypt signed a memorandum of understanding (MoU) for the development of the Marine offshore field. As part of the agreement, the Egyptian Natural Gas Holding Co. and the Palestinian Authority agreed to cooperate in the development of the gas field and a pipeline to the Gaza Strip and to the liquefaction facilities in Egypt.

Recent reports in the Arab media have claimed that sources in the Palestinian Authority and the Egyptian intelligence service, which has been conducting the talks, have said that Israel responded positively to the Egyptian efforts to make gas production from Marine possible. However, while the current Israeli government has been happy to promote the process, at this stage Jerusalem has preferred to downplay the matter. 

A senior Israeli official said that development of the Marine field could temper the motivation of terrorist organizations, led by Hamas, to resume firing rockets in general, and threatening Israel's gas facilities in particular. "The development of Marine, similar to the agreement with Lebanon, creates a new equation in which Hamas will have much more to lose if it renews the fire," the official said, noting that during the fighting in August, the entry of workers from the Gaza Strip to Israel was stopped, which created pressure on the Hamas leadership to avoid joining the Islamic Jihad in its fight with Israel. "A Palestinian gas field will increase the leverage of pressure on Hamas many times over," the source added. Sources in Israel estimate that practical moves on Marine will only happen, if at all, in 2024.

Israel and the US strenuously oppose Hamas involvement

The issue of developing the Marine gas field also has another important aspect - the Palestinian Authority. Israel and the US are not prepared to allow Hamas any involvement in large international projects in the Gaza Strip. The Palestinian Authority is meant to be the body that would conduct concession rights for drilling and production in the Marine field, on the assumption that there are commercial quantities of gas there and the geological conditions allow it.

A source in the Palestinian Authority has confirmed that there are negotiations on the matter. The source said that the Palestinian Authority is in talks with several international companies including Greek company Energean plc (LSE: ENOG; TASE: ENOG), which produces gas from the Karish field offshore from Israel and French company TotalEnergies, which is meant to conduct the drilling of the Sidon-Qana prospect, offshore from Lebanon.

According to a senior Palestinian official, Europe's energy crisis has played an important role in moving the negotiations forward. "The subject has been brought up during every single visit by senior European figures to the region including during the visit of the European Commission President Ursula von der Leyen in June." The Palestinian official added that as part of the agreed understandings, Egypt and Israel would supervise the gas production and some of the gas would be exported to the liquefaction facilities in Egypt and from there to Europe, and some would service the power station in Gaza, which would be converted to natural gas use.

Hamas has no plans to relinquish significant involvement in the process. Last month there was a demonstration at Gaza port in which the speakers demanded that representatives of Hamas and other organizations be allowed to benefit from their natural gas resources, while preventing Israel from "stealing Palestinian assets."

The Marine gas field, which is 36 kilometers offshore from the Gaza Strip coast, was discovered in 2000 by British Gas, which was then acquired by Shell, which relinquished rights to the field due to the security situation. The rights were sold to the Palestinian Investment Fund (PIF), which belongs to the Palestinian Authority, and CCC, a company owned by a Palestinian-Lebanese businessman, with 45% of the rights set aside for the energy company that will eventually develop the field. Estimates are that the Marine field contains 30 billion cubic meters (BCM) of natural gas, which would yield potential revenue of tens of billions of dollars. The cost of developing the field is estimated at more than $1 billion.

Israel has not officially relinquished rights to Marine

The status of the economic waters in which the Marine field is located is unclear. Israel has not officially relinquished rights to it but in 2000 the then Israeli Prime Minister Ehud Barak gave Palestinian Authority head Yasser Arafat the right to drill for gas and use any revenues generated. But in order to move the process forward, there would be the need for an agreement between all the parties involved that would legally ensure the status and security of the field. In the explosive geopolitical climate of the region, such an agreement will be difficult to reach.

Published by Globes, Israel business news - - on October 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Gaza Strip credit: Shutterstock
Gaza Strip credit: Shutterstock
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018