GAZA MARINE: NATURAL GAS EXTRACTION IN TUMULTUOUS TIMES?
In a report published by the Brookings Institution on 19 February 2015 entitled Gaza Marine: Natural Gas Extraction in Tumultuous Times?, the authors Tim Boersma and Natan Sachs highlight the challenges standing in the way of the successful development of Gaza Marine field and the benefits that its exploitation would bring the Palestinians and Israelis. Since its discovery in 2000, and despite Palestine leader Yasir Arafat’s optimism at the time of the discovery, the field was not developed. According to the report, the development of the field would significantly improve the Palestinian energy market and the Palestinian economy as well as the israeli market. Despite the technical and security-related challenges in developing Gaza Marine, the benefits from such a development are considerable but require strong Palestinian and Israeli leadership. Israeli-Palestinian cooperation is essential to move the project forward, but the already tensed relationship between the parties has furthered collapsed after the 2014 confrontation between Israel and Hamas, says the report.
The Gaza Marine field was one of the first discoveries in the Levant basin, a region believed to hold as much as 122 Tcf of natural gas according to the U.S. Geological Survey encompassing the Exclusive Economic Waters of Cyprus, Lebanon, Israel, the Palestinian Territories and Egypt. In 2011, Noble Energy made the discovery of the Aphrodite field in Cyprus’ Exclusive Economic Zone, a field estimated at 4.54 Tcf of natural gas. Israel has also made several discoveries, the largest being the Tamar and Leviathan fields estimated respectively at 10 and 22 Tcf of gas, enough to secure Israel’s domestic demand for decades and turn the country into a net natural gas exporter. The Gaza Marine field is estimated at 1 Tcf and despite being located in shallow waters and therefore technically easy to develop, it has still been untapped, adds the report. BG, its operator, has engaged in a series of talks with the Israelis for the purpose of selling the gas from the field to Israel but in vain, and in 2007 BG withdrew from the discussions, explains the report. The hostile climate and increased confrontations between Israel and Hamas have not allowed any progress towards the exploitation of the field despite efforts from the US to intervene.
The Palestinian energy system as explained by the report suffers from two major problems: a complete dependence on Israel for power generation and a chronic debt by the Palestinian electrical companies to the Israeli Electrical Corporation (IEC) due to severe underpayment to Palestinian suppliers, erroneous billing and theft of electricity.
Energy cooperation between the Israelis and the Palestinians would bring significant benefits to both parties. The development of the field could generate revenues to the Palestinians estimated to reach between $2.5 to $7 billion. The Palestinians would also have access to a domestic fuel source for electricity generation and sufficient power for water desalination in the Gaza Strip, as well as acceleration of the development of agriculture, essential to the local economy. The revenue generated from the sale of gas could also alleviate the debt to the IEC and end the frequent power outages.
The report does not dismiss the significant challenges ahead. The region is politically complicated, suffering from recurrent confrontations between Hamas and the Israelis. The benefits from an eventual development of the field would also largely depend on securing a customer for the gas. The report highlights that the revenues generated from the sale of gas would heavily depend on regional gas prices, on the price negotiated with the customer as well as on energy subsidies. The main problem remains the lack of cooperation between Israel and the Palestinians and Israel’s fear that gas revenues would strengthen Hamas.
The report can be accessed here: http://www.brookings.edu/research/papers/2015/02/gaza-marine-natural-gas
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She reads International Relations and Contemporary War at King's College London focusing on Natural Resources and Conflict. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat
Source: http://www.naturalgaseurope.com/brookings-institution-brief-gaza-marine-field-99178
