Palestinians missing out on a £2bn energy fortune
Gaza could have been a ‘Dubai on the Mediterranean’ with its huge gas reserves if Hamas had not been frozen out of a deal
Wherever there is oil and gas to be found in the early 21st century, warfare is never far away. And as the smoke clears from Israel’s blitz of the Gaza Strip, and Hamas and Israel move towards a ceasefire, it is tempting to speculate whether Gaza is another "resource war", as the British government's former scientific advisor David King candidly described the Iraq invasion this week.
When Israel disengaged from Gaza in 2005, the pro-Israel columnist Thomas Friedman declared that its population had the opportunity to become a "Dubai on the Mediterranean".
In 1999 BG found £2bn worth of gas reserves off the coast of Gaza
At the time this aspiration appeared unlikely in a densely populated strip of land with few natural resources, whose connections to the outside world were severely circumscribed by Israel’s continued control over its borders.
But Friedman's hypothesis was not quite as fantastic as it seemed. In 1999 the BG Group (the multinational arm of British Gas) discovered huge deposits of gas off the coast of Gaza. They were valued at £2 billion.
Some 60 per cent of these reserves were located within the maritime waters controlled by the Palestine National Authority (PNA), while the remainder fell under Israeli jurisdiction. In theory these deposits provided sufficient to meet the energy requirements of Gaza and the West Bank combined, with large reserves left over for export.
To the Palestinians, these sensational discoveries offered a potential route to economic regeneration after decades of dependency on external aid. In 2000, Yasser Arafat negotiated a deal with BG which allowed gas to be sold directly to Israel, with 40 per cent of the revenues going to the Palestinians - made up of 10 per cent to the Palestine Investment Fund and another 30 per cent to an Athens-based Palestinian construction company.
Following the outbreak of the second Intifada in 2000, the Ariel Sharon government vetoed this arrangement, claiming that the gas revenues would be used to finance "terror attacks" on its citizens. These concerns may have concealed more selfish motives.
BG claimed that Israel was not willing to pay for the gas at market prices
Israel imports much of its gas, and the Gaza Marine Field would supply 10 per cent of its annual requirements, at considerably less cost. Though various proposals were made to ensure that any Palestinian revenues were carefully monitored, Israel remained intransigent.
In 2006 BG, fed up with the Israelis' stonewalling, began to pursue the option of transporting Gaza's gas through Egypt instead. That same year things were further complicated by Hamas's victory in the Palestinian elections.
Hamas called for Arafat's deal to be renegotiated on terms more favourable to the Palestinians, but Fatah elements within the PNA were unwilling to allow a valuable instrument of political patronage to be controlled by their rivals in Gaza.
Israel, the PNA and their western backers were equally adamant that Hamas should not receive any revenue from the Gaza Marine Field. Under the Ehud Olmert administration, Israel reopened negotiations with BG in the summer of 2007 and declared itself willing to accept the deal previously made by Arafat which left Hamas in the cold. In December that year however, BG withdrew from negotiations, claiming that Israel was not willing to pay for the gas at market prices.
The power station that supplies the Gaza Strip could be converted to run on gas
At present, negotiations remain frozen, though a spokesman from the BG Group told The First Post that "all options are open" including the possibility of routing the gas through Egypt. The same source also claimed that the power plant which supplies electricity to the Gaza Strip could be converted to gas (it needs rebuilding anyway, having been bombed by the Israelis in 2006), thus making Gaza one of the largest distributors of gas in the region.
In theory these revenues could begin to reach the population within three years of a deal being concluded, but this prospect now appears unlikely. Nine years after the first gas flare was lit off the coast of Gaza, it is tempting to imagine what might have happened had Hamas been included in an arrangement that would have allowed the gas revenues to be fairly distributed.
Perhaps Gaza might have begun to fulfill Friedman’s predictions and look more like Dubai than Grozny. Instead it has passed from direct military occupation to economic siege, culminating in a catastrophic war that has pushed its population closer to destitution. And for the time being the beleaguered Gazans can only look out to sea at an invisible and unutilised resource, whose benefits may never reach them. ·
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