British Gas to supply Gaza gas to Israel

David Hayoun
Globes
20 June, 2002

The Prime Minister's Office and the Ministry of National Infrastructures decided to make natural gas reserves off the Gaza coast a key supply source for Israel. Sources inform ''Globes'' that they promised British Gas, which produces the gas, that Israel will buy 1.5 billion cubic meters a year.

The decision will make British Gas one of the three main suppliers in Israel, alongside Israeli and Egyptian suppliers. Each supplier is scheduled to sell 1.7 billion cubic meters a year.

The decision is a major policy u-turn about the Gaza gas. Last year Israel Electric Corporation (IEC), Israel's largest natural gas consumer, decided not to buy gas from British Gas' Gaza and Israel offshore fields, mainly because it was more expensive that the Israeli and Egyptian suppliers. British Gas' partners in the Israeli fields are Isramco (ISRL), Dor Chemicals, Israel Petrochemical Enterprises, Clal Industries and Investments and Alon Israel Fuel Co.

British Prime Minister Tony Blair heavily lobbied Prime Minister Ariel Sharon on British Gas' behalf in recent months. As a result, the Prime Minister's Office and the Ministry of National Infrastructures agreed to buy gas from the Gaza offshore fields, which have tens of billions of cubic meters in reserves.

British Gas also benefited from its participation in the natural gas pipeline project with Paz - Africa-Israel Investments, which means it will also deliver gas. Without British Gas, it is doubtful if the Ministry of National Infrastructures will approve the Paz - Africa-Israel consortium's bid in the project's tender - the only one submitted. The project will cost an estimated $250 million.

Ministry of National Infrastructures director general Yair Maayan confirmed that British Gas was promised that Israel would buy 1.5 billion cubic meters of gas a year from it. He said it was important the natural gas market be competitive, with three main suppliers, instead of two, as previously planned.

Maayan said British Gas had to be promised the purchase of that amount of natural gas in order to make the costly development of the Gaza field economical. The agreement with British Gas will be for 10-15 years.