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The gas deal with Gaza could make Israel and Hamas unlikely partners

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GAZA CITY — The European race to secure alternatives to Russia’s energy supply is reviving a long-abandoned Palestinian initiative to extract natural gas off the coast of the blockaded Gaze Strip.

Palestinian officials said rapidly advancing negotiations with Egyptian investors could bring a rare glimmer of hope to Palestinians after plans to develop Gaza’s gas — along with plans to establish a Palestinian state — were put aside by more than two decades of debilitating conflicts with Israel. and equally persistent Palestinian political divisions.

The $1.4 billion project, which will be completed in February 2023 and possibly start gas production in March 2024, will be an important collaboration between the Palestinian Authority, Egypt, Israel and Hamas, the Islamic militant group that controls the Gaza Strip rules. Hamas and Israel are engaged in four devastating wars in the Gaza Strip. Both will have to be on board, at least tacitly.

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The multilateral partnership will also, industry and political analysts say, be a lifeline for the poor and deeply unpopular Palestinian Authority, which is based in the West Bank and has had no authority in the Gaza Strip for the past 15 years.

The Ramallah-based authority sees Gaza’s gas reserves as a “pillar for improving its fiscal plans,” said Zafer Milhem, chairman of the Palestinian Authority for Energy and Natural Resources.

“We have been waiting for this development and the prosperity that comes with it,” he said. “I hope this will be a step towards the future.”

The Egyptian-led project “will contribute to strengthening Palestinian national independence,” according to a February 2021 memorandum of understanding between the Palestine Investment Fund (PIF) and Egyptian Natural Gas Holding Co. (EGAS), an Egyptian consortium of investors.

Since its initial discovery by British Gas in 1999, Gaza’s natural gas—an estimated 1 trillion cubic feet—has been caught up in the Israeli-Palestinian conflict and trapped under the sea.

In 2000, a day after Palestinian nationalist leader Yasser Arafat hailed the gas discovery as a “gift from God”, the second intifada broke out. Israeli Prime Minister Ariel Sharon halted the project, warning that profits could be funneled to Hamas and other militant groups.

But the booming global energy market and increased regional energy cooperation have spurred progress, and they could finally unlock one of the Palestinians’ few potentially highly lucrative natural resources, Palestinians involved in the negotiations said.

In October, Egypt’s Petroleum Minister, Tarek el-Molla, announced a framework agreement between the Egyptian and Palestinian parties, with close scrutiny and unofficial approval from Israel. The Palestinian Authority ratified the agreement that month and says it is waiting for Israel, which plans to swear in the next government, to send an official “letter of consolation” to officially give the project a green light.

Israel hopes its gas will finally make it part of the Middle East

Israel’s newly elected Prime Minister Benjamin Netanyahu called the proposal “good for stability, good for prosperity and good for peace” in 2011. And Palestinian negotiators said they received positive signals from Israelis when discussing the issue in recent years at the East Mediterranean Gas Forum, in which Israel and Palestine are both member states.

The offices of Netanyahu and Bezalel Smotrich, the head of the far-right Religious Zionist party expected to become the second largest in the new Israeli government, did not respond to requests for comment on the current Gaza project.

Ghassan Khatib, former Palestinian planning minister, said the Palestinians do not yet know whether Israel, preparing for the most right-wing government in its history, will oppose.

“Israel has changed,” he said. It is gradually becoming less interested in making the Palestinian Authority viable because it is no longer convinced of the idea of ​​the two states, in which an independent Palestine would exist alongside Israel.

But even if the entire venture has Israeli approval, the Palestinian Authority will still face its bitter rival, Hamas, which has demanded a share of the expected windfall.

“We will not allow gas to be monopolized and Gaza not to take full advantage of it,” Ghazi Hamad, a member of Hamas’ political bureau, told The Washington Post.

At a ceremony in September, Hamas put up banners near Gaza’s port reading “our gas, our right”.

The as-yet undisclosed deal grants a 27.5 percent stake to PIF and a further 27.5 percent to the Athens-based, Palestinian-owned Consolidated Contractors Company (CCC). The remaining 45 percent will go to the Egyptian consortium EGAS. Under the agreement, the gas will be developed in Palestinian waters and then transferred via a 40-mile submarine pipeline to Egyptian processing facilities, where it will merge into the Egyptian energy grid and then be sold as an export to Palestinians and others. .

“It must be commercial, between the developing companies and the buyers, not linked to politics,” said a Palestinian official who spoke on condition of anonymity because the deal is not yet finalized.

The outlook comes as Europe scours the globe for alternatives to Russian gas and oil, especially in the Eastern Mediterranean.

Gaza’s offshore gas fields, known as Gaza Marine 1 and 2, are located 20 nautical miles offshore. The estimated trillion cubic feet of reserve is a drop in the ocean compared to Europe’s annual consumption of 20 trillion cubic feet, and it is also much smaller than Israel’s gas fields.

But Europe’s future energy strategy will be deliberately patchwork and diversified, and Milhem, the chairman of the Palestinian Energy Authority, said outside pressure has been a key motivator.

“The crisis in Ukraine, which coincides with increased activity in the Eastern Mediterranean, has helped move the gas deal forward,” he said.

Mkhaimar Abusada, an associate professor of political science at al-Azhar University-Gaza, said Palestinian officials also took note of Israel’s October deal with Lebanon, a country with which it is still technically at war.

As part of his re-election campaign, Netanyahu called the US-brokered deal, which will allow Israel and Lebanon to exploit potentially rich offshore gas resources, a “historic surrender” to Hezbollah, the Iranian-backed militant group based in Lebanon.

But Abusada said Palestinians were encouraged to see the deal, which initially met resistance from Hezbollah, eventually go through.

“The Palestinians feel there is a regional and international interest in developing this gas field in Gaza,” he said.

Gas would bring the Palestinians closer to energy independence from Israel, their largest supplier. The West Bank imports 750 megawatts of its total consumption of 850 megawatts. Gaza relies on 120 megawatts of Israeli electricity and Israeli fuel for its power plant, which produces about 45 megawatts.

In August, during the most recent flare-up with Israel, Gaza’s regular blackouts extended from eight hours to 12 hours, and hospitals ran on generators as medical staff attended to the injured.

Residents here fear that either Israel or the Palestinian Authority — or probably both — will stand in the way of completing the gas project.

“There are a lot of resources in Gaza — antiquities, gas, manpower — but nobody puts these resources to good use,” said Mahmoud Sayad, a 44-year-old father of seven from Al-Shati refugee camp, west of Gaza City.

“The Palestinian Authority doesn’t care about Gaza; for them the gas field is a source of money,” said Ramy Susi, a 35-year-old construction worker from the same camp, who said he expects profits to be squandered by corrupt politicians. “How can this gas make a difference in my life?”

Rubin reported from Ramallah, West Bank.

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