The gas fields off Gaza's coast: how close Gaza is to Nigeria, geography notwithstanding

By: Omar Shaban

How close Gaza is to Nigeria despite the distance of geography. Nigeria is among the largest exporters of oil in the world and it is among the poorest regions of the world at the same time. Hundreds of Nigerians die while trying to obtain a few litres of their oil, which flows from between their eyes; and the Gazans suffer severe poverty and high unemployment and die from the cutting of electricity and gas, while the gas fields in the middle of the Mediterranean are in the sight of their eyes.

With the existence of strong indicators of the possibility of the presence of gas and oil in the lands and waters of Palestine, the Palestinian Authority in the year 1999 granted an exclusive contract for a period of 15 years to the two companies British Gas (BG) and the Consolidated Contractors Company CCC to prospect for gas in the sea of Gaza. With the beginning of the search and prospecting operations, which did not take long and did not cost much on the part of the two developing companies, there were discovered in the year 2000 two fields off Gaza's shores: 1) the Gaza Marine field, which lies entirely within the Palestinian territorial waters off Gaza City; the confirmed reserve in this well is estimated at 28 billion cubic metres; 2) the Gaza Border field, which lies within the maritime border area between the Gaza Strip and Israel, and the confirmed reserve in it is estimated at 3 billion cubic metres. The gas reserve in the sea of Gaza is 31 billion cubic metres, whose market value is estimated at more than 6.5 billion dollars.

A contract unjust to the Palestinian side:-

According to many international and local opinions, the contract granted by the Palestinian Authority to the two developing companies is very unjust to the Palestinian side — not only because of depriving the Palestinians of exploiting it until now, but because of the modesty of the proportion allocated to the Palestinian side compared with the shares of the two developing companies. It would have been possible to content oneself with one of them, which would have raised the proportion of the Palestinian side. The two developing companies were given the right of prospecting and exclusive marketing of the gas in the event of its discovery. These two companies together were granted a total ownership proportion of 90% — 60% for the British Gas company (BG) and 30% for the Consolidated Contractors Company (CCC) — while only 10% was allocated to the Palestinian side. This contract raised some suspicions regarding transparency in granting the exclusive contract, which took place without a public tender, and the low proportion that was allocated to the Palestinian people, which indicates a high degree of injustice. The developing companies have invested until now nearly 100 million dollars in the prospecting works. It is expected that the total volume of investment will reach 800 million dollars, while they will obtain returns exceeding 4 billion dollars, which makes the rate of return on the investment exceed 450%.

Once again politics tampers with the economy and development:-

The discovery of the gas and the late President Yasser Arafat's inauguration of it in a solemn celebration in the year 2000 gave the Palestinians hope that Palestine would become a Gulf state — not in geography but in terms of its joining the club of the gas-producing states. Only for the Palestinians to discover later that they are closer to Nigeria — not in geography either, but in terms of their being deprived of enjoying their resources. The process of exploiting Gaza's gas collided with the political and economic obstacles on the Israeli side, and with the internal division and the absence of legislative and communal oversight on the Palestinian side. Israel prevented the selling of the Palestinian gas to others so as to be its sole buyer and on its own conditions. Israel offered to buy the Palestinian gas at prices very low compared with the international prices, in return for its protecting the gas fields with its naval forces and guaranteeing the safety of the workers and their equipment — benefiting from the Palestinians' not possessing the technical or the military capacity to do that, as the gas fields are located 30 kilometres from Gaza's shores and at a depth of 600 metres.

A second issue of disagreement that obstructed the sale of the Palestinian gas was represented in the fact that the Israeli prime minister at the time, Ariel Sharon, stipulated that the gas be pumped from Gaza to the Israeli ports via marine pipelines and not by land, so that the Palestinians would not control the energy resources feeding the Israeli economy — whereas President Arafat insisted that the gas be brought to Gaza first and then pumped by land pipelines to Israel, in a way that indicates the Palestinians' sovereignty over their resources, and its use in generating electricity and in meeting the industrial and domestic needs. It is worth mentioning that the only electricity-generating plant in Gaza relies on industrial fuel — it is the plant owned by the Consolidated Contractors Company (CCC) with others, designed to rely on gas in later stages. The negotiations stopped because of those disagreements, the rise of the second intifada in September 2000, the death of President Arafat, and Sharon's entering a long coma. This forced Israel to search for an alternative, to find it in Egypt, where an agreement was signed with the Egyptian government to supply Egyptian gas to Israel extending for twenty years. This contract was annulled last year under the pressure of the Egyptian revolution and because of the conditions unjust to the Egyptian side, as described by the specialists.

The negotiations return anew:

Because of the Israeli economy's need for gas to fund the growth it has witnessed in the past few years, Israel has renewed its negotiations to buy the Palestinian gas. The new Israeli strategy centred on three foundations: a) working to exclude the Palestinian side, represented in the investment fund that supervises the management of the Palestinian Authority's investments, from the negotiations and confining them to the British Gas company, justifying that by Hamas's control over Gaza and its shores; b) that the Palestinians obtain their share of the deal in the form of goods and services so that neither the Hamas movement nor even the Palestinian Authority itself benefits from it; c) that the gas be transported from its marine fields in Gaza by marine pipelines to the Israeli port of Ashkelon — which means the completion of Israeli control over the Palestinian gas. A new factor entered the equation of the Palestinian gas, represented in the Hamas movement's entry into the political scene since June 2006. The Hamas movement, which was not much interested in the gas fields years ago because of its realisation that it is outside the scope of its control and that its rockets at that time could not reach it, would become more interested with its control over the Gaza Strip since the year 2007 and with the growth of its rocket capacities, which reached in the last war a range of 80 kilometres. This makes the gas fields, which are thirty kilometres distant, within the range of its rockets theoretically. Thus the process of selling the Palestinian gas becomes more complex than before in light of the division. This makes the Palestinian reconciliation a fundamental demand — not only for the peace process but for the sake of achieving development, fighting poverty and unemployment, and lightening the financial crisis of the Palestinian Authority.

http://www.al-monitor.com/pulse/ar/contents/articles/opinion/2013/03/gaza-oil-fields.html