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Unravelling the Carbon Web is a project by PLATFORM. We work to reduce the environmental and social impacts of oil corporations, to help citizens gain a say in decisions that affect them, and to support the transition to a more sustainable energy economy.

Gaza's Gas - destined for Israeli nightclubs or Palestinian refugee camps?

The Palestinian Authority’s economic plan announced in Sharm El-Sheikh in early March hoped for accelerated development of the Gaza Marine Gas Field, 30 kms off the coast of the Gaza Strip in Occupied Palestine. However, the issue of who receives the revenues, consumes the gas and controls the supply remains highly problematic.

The field is estimated to contain over 1 trillion cubic feet of recoverable natural gas, and could be worth anywhere between $4-8 billion. Although not of enormous consequence at the international level, they are highly significant in a context where Palestinians and Israelis are all heavily reliant on imported fuel.

While the gas has been lauded by Tony Blair, Envoy for the Quartet, as offering the “economic fuel to jump-start the Palestinian economy”, proposed plans and international pressures threaten to deprive the Palestinian people of the benefits of a local resource.

The Gaza Marine Gas Field was discovered by BG (formerly British Gas) in 2000, following a 1999 contract signed by Arafat. The 25-year concession covers the entire maritime zone off Gaza’s coast that was allocated to the Palestinian Authority (PA) in 1994 under the ‘Gaza-Jericho First’ Agreement. The rights are shared between BG, Lebanese Consolidated Contractors and the PA's investment arm, the Palestine Investment Fund, with the PA expected to receive around $40 million a year in revenues.

A 2001 BG development plan approved by the PA proposed to deliver the gas by pipeline directly from the field to a power plant in Gaza. However, strong opposition from Israel’s Sharon government and the intensification of the Second Intifada put extraction on hold. BG redirected its focus to the possibility of piping the gas to Egypt, where it maintains other extraction projects and a gas liquefaction plant for export. By summer 2005, BG signed an agreement with Egyptian company EGAS covering Palestinian exports.

However, growing concern over dependence on imported energy together with Sharon’s 2005 Gaza ‘disengagement’ led the Israeli government to increase pressure for the gas to be piped to Israel. Following a request from Israel's Prime Minister Olmert, Tony Blair interceded with BG, persuading the company to shelve the Egypt plan and re-open talks with Israel in 2006. Israeli negotiators insisted that the gas be piped first to Ashkelon, its southern-most city, there to enter the Israeli grid - with promises that a portion of the gas could be pumped south again to Gaza, and that revenues would be paid to the PA.

Since then, negotiations have repeatedly stopped and started - most recently with a concerted push by the Israeli government in late 2008, prior to the January 2009 air and ground attack on Gaza.

The question of who will receive the Palestinian allocation from the gas sales has received a lot of attention. Hamas as the elected government and only authority in Gaza, believes that it should receive at least a portion. However, Abbas’ Fatah government in Ramallah continues to be the main Palestinian representative engaging with BG. Meanwhile, Israeli leaders are adamant that they must control how revenues are spent, at some points demanding that payments to Palestinians be made in goods rather than money - a scary echo of the devastating ‘Oil for Food’ Programme in Iraq.

Of more importance are the issues of who will consume the gas and who will control the flow. Gazan dependence on Israel to allow electricity and fuel across the border remains a chronic problem - particularly as the Israeli Army openly uses electricity cuts as a military tool. Around 50% of Gaza’s electricity flows through ten 12-megawatt feeder cables. This supply, sold by the Israel Electricity Company, is regularly reduced or stopped on orders of the Israeli Ministry of Defence.

A further third of Gaza’s supply comes from the Palestinian 80 megawatt power plant near Nusseirat Refugee Camp, that runs off industrial diesel. The plant requires 2.2 million litres of diesel each week, which has to be imported through Israeli checkpoints. Deliveries are regularly stopped, particularly during Israeli military operations. Reserves remain critically low, to the extent where a two day block on imports leads to a full shut-down. During the siege prior to the Jan 2009 attacks, back-up generators in hospitals relied on diesel smuggled through the Rafah tunnels. Electricity shortage remains the norm in Gaza, with a majority of households having power cuts for at least eight hours per day. Refitting the Nusseirat power station to run off gas rather than diesel would be cheap - much cheaper than continued dependence on imported fuel.

If consumed domestically rather than sold, the reserves in the Gaza Marine Field are enough to power all Palestinian needs for over a decade, while still exporting a significant proportion and removing one of the key elements of control which Israel exerts over the population in Gaza.

In terms of building a regional economy, a cheap and local source of energy which cannot be switched off by an occupying power offers Palestinians a far better option than watching Gazan gas fuel the not-so-distant lights of Ashkelon nightclubs.