Israel has been holding secret talks with BG Group (British Gas) about the development of natural gas offshore from Gaza, Globes reported on Thursday.
BG has the Palestinian Gaza Marine license, which gives it development rights.
The talks concern the potential for supplying gas from the reservoir to the Palestinian population in the Palestinian Authority and Gaza.
The talks, which have been going on for several months, are unrelated to next week’s visit by President Obama, although the subject may come up during his talks with Israeli leaders.
Attorney Yitzchak Molcho is representing Israel in the talks. Quartet Middle East envoy and former U.K. prime minister Tony Blair is also involved.
Due to political sensitivities, there are no direct talks with Palestinian representatives, as far as is known.
BG, which discovered the Gaza Marine reservoir in 2000, owns 60 percent of the rights. Its partners are Contractors Company (CCC), owned by Lebanon’s Houri family, which owns 30 percent, and the Palestinian Investment Fund (PIF), which owns 10 percent.
Since the discovery, BG has tried repeatedly to sell gas to Israel Electric Corporation but without success. The Gaza Marine reservoir, located about 20 miles west of Gaza, has an estimated 30 billion cubic feet (BCM) of gas, enough to meet the Palestinians’ needs for several years.
The Gaza Marine reservoir will cost an estimated $2.5 billion to develop over three years.
The Palestinians have one power station, a 240-megawatt plant in Gaza built by Enron. The plant is powered by diesel because Gaza is not hooked up to any natural gas pipelines. The Palestinian Authority wants to build four natural gas power stations, the first of which is planned near Jenin.
In early 2011, Prime Minister Binyamin Netanyahu made an overture to PA President Mahmoud Abbas concerning development of the offshore Gaza gas field. A proposal was made after several incidents of sabotage of the Sinai pipeline led to permanent cessation of gas deliveries from Egypt.
Israel wanted to cooperate with the Palestinian Authority to develop Israel’s Noa South reservoir, which spreads into Gaza’s maritime area. In the end, Israel decided to develop the Noa reservoir without any official agreement.