BG Group in talks over Gaza Strip gas deal

Oil and gas firm BG Group said today it remained in talks over a potential deal to supply Palestinian gas to Israel.

According to the Times newspaper in England, BG Group is poised to agree the terms of an historic $4bn (€2.97bn) 15-year contract to supply Israel with gas farmed from off the Gaza strip.

BG, formerly part of British Gas, confirmed it was still in talks regarding a possible deal but warned that any deal depended on agreements being reached between the Israeli and Palestinian governments.

A spokesman for BG said: “The negotiations with Israel regarding Gaza gas are ongoing but there are still commercial issues to be resolved.

“The key point is that bilateral agreements between the two governments are essential before any deal can be made.”

The news came after a bullish statement from the Israeli authorities which said they wanted to conclude an agreement as soon as possible.

If a deal was reached it would enable BG to develop a field off the Gaza coast following the discovery of gas there in 2000. The field would be controlled by the Palestinian authorities.

Any deal would represent a landmark in Middle Eastern relations. Under former prime minister Ariel Sharon, Israel vowed never to buy gas from neighbouring Palestine.

The project has been plagued with problems since BG made the discovery, including a legal challenge from the Israeli supreme court to determine whether Palestine had any rights to the resource.

It is understood the field could supply enough gas to meet 10% of Israel’s yearly energy demand and could net Palestine royalties of $1bn (€742m).

The Times said the Israeli cabinet approved a proposal to buy gas from the Palestine Authority three weeks ago. But a number of significant political hurdles remain in the way of a deal, including issues regarding payments.