Palestinian Gas Deal Hangs on Political Echelon

RAMALLAH (Reuters) -

A billion-dollar deal signed this month involving an Israeli natural gas field and a Palestinian power firm marked a rare private-sector victory over political conflict, but it may need top-level support to succeed.

Palestinian officials say implementation will depend on guarantees by the governments of both sides.

The deal’s Palestinian backers say Israel has pledged that any future political or security crisis will not interrupt the gas supply. No such assurance has been made publicly, however.

“There was a kind of guarantee from top levels in Israel … that there would be a continuous flow of gas no matter what happens on the political front,” said Samir Huleileh, CEO of the Palestine Development and Investment holding company.

PADICO holds an 18 percent stake in the Palestine Power Generation Company (PPGC) at the center of the deal, which Huleileh said had received the guarantee from Israeli Prime Minister Binyamin Netanyahu’s office less than a year ago.

Netanyahu’s office did not respond to a request for comment.

Under the agreement, PPGC is to buy $1.2 billion of gas over 20 years from the U.S.-Israeli group developing the huge offshore Leviathan gas field.

At a signing ceremony on Jan. 5, Israeli billionaire Yitzhak Tshuva, whose Delek Group is a major stakeholder in Leviathan, hailed the deal as historic and said it would bolster peace efforts. Delek officials, however, declined to speak to Reuters on any Israeli political backing for the deal.

Palestinian Deputy Prime Minister Mohammed Mustafa was showing caution, saying his government looks favorably on the agreement, but that final approval would come only after it had seen the text of the contract and studied Israel’s political commitments.

According to Walid Salman, PPGC’s chief executive, the Leviathan deal makes economic sense.

“Commercially, the agreement is a win-win. What’s in the mind of the Palestinian Authority and Israel is not my field,” he told Reuters, referring to possible political complications.