Gas bonanza for Palestinians

Suzanne Goldenberg in Gaza
Tuesday September 26, 2000

A giant, British-operated drilling rig anchored 30 kilometres off the Gaza Strip has tapped into a potential bonanza: gas fields that could turn the future Palestinian state into a key Israeli energy supplier.

The reserves, discovered last week by BG International (formerly British Gas) during the first exploration of waters off the Palestinian Authority-controlled territory, offer the first real hope of economic independence for a largely impoverished people on the brink of statehood.

The find follows good news for Israel too. BG found gas reserves in the country's territorial waters earlier this year - a stunning discovery for a state with no fuel of its own.

"At the end of the day, it is still the Holy Land, the land of miracles," said Hugh Miller, who heads BG's operations in Israel and the Palestinian Authority. "People said for years and years, there was no potential here, and now it looks like there is."

But fulfilling that potential may require another miracle: the two sides would have to overcome the old hostilities that have deadlocked the Middle East peace process, and navigate legally uncharted waters concerning Palestinian rights to offshore resources in the absence of a state.

But, for now, economic exigencies are forcing a rare spirit of cooperation; before the gas reserves can begin to flow a $1 billion investment in pumping stations and pipelines will be required - a burden neither side wants to shoulder on its own.

So far, Israel appears inclined to play along. Prime Minister Ehud Barak ordered the navy not to interfere with the drilling off Gaza, and Israeli officials seem prepared to recognise that, even without a full state, the gas belongs to the Palestinians.

Not everyone in Israel is happy with that assumption. Local energy companies are suing in Israeli courts to stop the drilling, and leaders of the right-wing Likud party have accused Mr Barak of handing over Israeli riches.

If Mr Barak's shaky minority government falls, a new prime minister could slam shut the door.

Preliminary estimates of the gas reserves indicate there is 25bn cubic-metre deposit in Gazan waters, and 50bn cubic metres in the four wells BG has drilled off the Israeli port of Ashqelon. Gaza's share of the field is believed to contain far more gas than the Palestinians can absorb, which means that the state-in-the-making could become a fuel supplier to Israel, whose electricity demands are growing by 7% a year.

That appears to suit the Palestinians, who say they are approaching statehood as hostages to their wealthier and more powerful neighbour; Israel can cut off all Palestine's imports by closing border crossings, make the taps run dry in their homes, dim the lights in their offices, and interfere with telephone and internet services.

Local gas would bring a welcome sense of independence.

"This is a situation that could really lift up the Palestinian economy," said Mohammed Shtayyeh, director of the Palestinian Economic Council for Development and Reconstruction. "If Palestine is independent, and if there is gas and other oil products generated in Palestine, then we will no longer be hostage to the Israeli problem of oil prices and oil shortages."

Related Links:

Arafat launches gas exploration scheme

Move.to/Palestine