RAMALLAH, May 27 (JMCC) - Two gas fields off Gaza could fund the Palestinian Authority and its energy needs for years to come, so why doesn't the international community pressure Israel to allow their development?, asks Victor Kattan in an editorial
for Foreign Policy
According to CCC, the failure to develop and commercialize the gas in Gaza is due to the Israeli government's insistence that it purchase the gas at prices below market value. Apparently, Israel wanted to negotiate a contract with the consortium whereby it would only pay $2 per cubic foot rather than the market price of $5 to $7. As a source inside CCC told me: The biggest resource in Palestine is being held up by the Israelis. If this is resolved it would reduce the subsidy the EU and U.S. gives the PA.
[...]One can only conclude that Israel continues to block the development of the gas fields as part of its blockade against the Gaza Strip.
According to Dr. Muhammad Mustafa, chairman and CEO of the Palestine Investment Fund -- which is one of the partners of the Gaza Marine project -- it would cost $800 million to develop Gaza Marine. No energy company is going to make this financial commitment unless it can find a buyer who will agree to a long-term contract where the price of the gas is set at a price representing market value. And for a credit worthy buyer to agree to sign a contract with the consortium, the developers would need political and security clearance from Israel to export the gas. Unfortunately, successive Israeli governments have been unwilling to provide this. Thus, the developers are faced with an ultimatum: either agree to sell the gas to Israel at below market price or don't sell it at all.
The moral of the story is that the EU, which invests hugely in the Palestinian economy, would be better off assisting the PA with the development of the gas fields by publicly calling on Israel to allow for their development, rather than calling on third states to donate more funds for specific EU approved projects. This is especially salient as more than a quarter of all Palestinian structures demolished by Israel in 2011 were funded by international donors including European governments and the EU. Electricity is a necessity for the Palestinians, and especially for the residents of the beleaguered Gaza Strip where power cuts are a normal and everyday occurrence. The proceeds received from the sale of the gas and the savings to the Palestinian energy sector would give a huge financial boost to the PA and would allow it to provide the foundations for a truly independent Palestinian state. Finally, it would save substantial sums of money for the EU, which is by no means a small matter, especially in a time of financial austerity.