Palestinians prepared to assure Israel of gas supply

The Palestinian Authority has not yet agreed to Israeli or international supervision of payments for natural gas sales.

The new Palestinian Authority (PA) government is prepared to sign a letter guaranteeing the supply of natural gas to Israel, according to recent discussions in Jordan between BG Group plc (NYSE: BRG; LSE: BG) (British Gas) executives and representatives of PA Minister of Finance Dr. Salam Fayyad.

Reports sent to the Prime Minister’s Office and the Ministries of Finance and National Infrastructures suggest that the Palestinians are prepared to anchor in a commercial contract to be signed between British Gas and the government, a commitment to sell natural gas to Israel. This represents some progress in the negotiations with the Palestinians, given that Hamas refused to sell gas to Israel when it came to power.

Senior government officials said, however, that the Palestinians have not yet agreed to Israeli supervision of payments to the PA for the natural gas purchases. British Gas reportedly raised the possibility of international supervision of the money in order to ensure that it reaches its destination and not used to finance terrorism. The PA has not yet formulated a position on this proposal.

The talks in Jordan lasted three weeks. There were no Israeli representatives at the talks. Government sources said that British Gas strongly favors supervision of the money paid the Palestinians because UK law is very strict on this matter.

The cabinet recently approved continuing negotiations with British Gas for the purchase of natural gas from its fields offshore from Gaza, despite security reservations about a deal. British Gas owns 90% of the Marin gas field, with the PA and Consolidated Contractors Company (CCC), owned by Lebanon’s Houri family, owning the rest.

Published by Globes [online], Israel business news - - on May 7, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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