The forgotten siege of the Gaza gas assets

July 23, 2013 by OccupiedPalestine

Natural gas assets in the Mediterranean Sea have long played a crucial role in politics; it is therefore easy to see why they continue to receive media attention. Yet, surprisingly, few mention Gaza in this context.

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Gaza Marine 1 (Photo by Thesantosrepublic)

Why would they? Gaza is a small, densely populated costal strip isolated geographically as well as economically from the rest of occupied Palestine. Here, the Israeli siege on the territory creates constant shortages of food and fuel. The population of Gaza suffers from daily power-cuts that sometimes last up to 18 hours. A majority of the gas in Gaza since 2011 has been imported at high cost from Egypt through the Rafa border crossing. This is a huge burden for an already struggling economy that is being kept afloat by foreign support.

Contrasting with the poverty of Gaza’s population is the Palestinian territory’s rich endowment of gas reserves. Thirty-six miles from land stands the oilrig Gaza Marine 1, beneath which lies Gaza’s own treasury: vast gas fields that the company British Gas estimated to be worth around 7 billion US dollars. Yet the gas never leaves the seafloor and the profit remains an illusion. Why?

The fields were discovered in the mid nineteen nineties by one of the world’s leading gas companies, British Gas (BG), which was at the time operating in the Sinai. In 1999, the Gaza-agreement was signed, giving BG the biggest part in the exploration licence. The deal would also profit the Palestinian people through taxes and royals. BG estimated that 800 million dollars invested would generate over four billion, a return of more than four hundred percent.

The project went smoothly in the beginning; between the years 2000 and 2002 BG spent an estimated 100 million dollars on drilling and studies. There was only one obstacle: Israel.

Israeli politicians realised the risk the gas constituted to the future of their occupation of Palestine, because as long as Gaza is kept poor and economically dependent on international support it will remain politically impoverished.

Israel therefore claimed that since PA would be unable to ensure the security of important construction related to gas extraction, a pipeline would be built from the gas field directly to Israeli ports. Palestinian officials immediately rejected this suggestion because it would deprive the people of Gaza the profits created by the extraction of their own gas.

Since Israel would also be the main purchaser of the Gazan gas, it could prevent the exploration by other means. During price negotiations with BG, Israel insisted that it receive a price for the gas that would have been almost three times lower than the normal market price at that time. Since the profits would thus be considerably lower than previously expected, BG eventually decided to leave the negotiations with Israel in 2007.

Instead, BG started to look elsewhere for potential purchasers. By converting the extracted gas into liquid natural gas (LNG), BG could have access to bigger markets in Japan and Korea.

However, the Israeli obstacle remained. This time the Israeli authorities claimed that the extraction activity could only be carried out with their approval. According to international law, however, this is false. Pursuant to the 1993s Oslo-accords, the Palestinian territories were entitled to territorial waters in accordance with international agreements. The UN Convention of the Law of the Sea from 1982 clarifies that sea bound nations have the right to an exclusive economic zone stretching 200 nautical miles (around 370 km) from land. According to the convention, “a coastal nation has control of economic resources within its exclusive economic zone.”

Despite Israel’s unlawful claims, nothing could be done about the situation and BG is not currently working on the project. The untapped gas reserves are yet another lost economic opportunity for Gaza, whose economy has been devastated by the siege Israel imposed following the Hamas takeover in 2006.

Today, the gas still remains trapped 600 m under the sea, hidden away from the Palestinian people, and this is just where Israel wants it.

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