UK natural gas player BG Group is close to signing a landmark deal to supply Palestinian gas to Israel from a field off Gaza’s coastline, it was reported.
The Times of London reported that BG negotiators will meet with the Israeli cabinet next week to work out terms of a 15-year contract worth up to $4 billion.
A deal would allow BG to press on with development of the field off Gaza, which is the Palestinian Authority’s only natural resource and is capable of supply 10% of Israel’s annula energy needs, the newspaper said.
The Palestinian Authority could earn revenues of up to $1 billion over the term of the contract.
BG discovered the Gaza Marine field in 2000. It is thought to hold 1 trillion cubic feet of gas. BG plans to export the gas via a subsea pipeline to the Israeli port of Ashkelon.
However, source in the Middle East told the newspaper that political tension in the region, and continuing violence in the Gaza strip, could derail attempted to sign a heads of terms agreement within the next few days.
Israel only approved a proposal to buy the gas from BG three weeks ago, The Times said. The country had challenged the Palestinian Authority’s right to the gas following its discovery. Last year UK Prime Minister Tony Blair intervened in a deal to sell the gas to Egypt, asking BG to give Israel another chance.
Major obstacles to be overcome include how Israel will pay for the gas. Israeli defence officials want payments to be made in goods and services and insist no money go to the Palestinians’ Hamas-controlled government.