The Diplomatic Potential in Developing Gaza’s Offshore Gas Field

Commentary / Israel and the East Mediterranean

Israel, Hamas and Egypt have long been debating whether to move ahead with an arrangement on Gaza and how to do so. The Palestinian Authority (PA) has to a large extent been excluded from this discussion, especially due to the absence of a significant diplomatic discourse with Israel and its rift with Hamas. Israel’s interest lies in advancing such a move, but in a manner that also leaves room for the PA’s involvement in order to ensure the broad legitimization required. The PA’s involvement also serves Israel’s long-term interest in preventing the strengthening of Hamas at the expense of secular elements in the Palestinian national movement. Development of the Marine gas field off the Gaza coast is a new element that could and should help in this regard. The development could take place under the auspices of the Eastern Mediterranean Gas Forum (EMGF) established last year in Cairo. That would allow the sides to overcome the internal Palestinian political crisis stemming from the split between Hamas and the PA and hampering the development of the gas field. It could also resolve the severe crisis in the Palestinian energy sector and ease the economic hardship in the Gaza Strip.

The gas field was discovered in the year 2000 some 36kms offshore at a depth of 600 meters. Estimated to hold about 1 TCF, making it smaller than other fields discovered in the region, the Marine field is commercially viable. The reservoir was discovered by British Gas, which was subsequently bought by Shell. Once it transpired that prospects of developing it were slim, Shell sold its share to the PA, which is currently the largest owner along with the Palestinian-Lebanese Consolidated Contractors Company.

Many contacts were held over the years about possible development of the Marine reservoir, with Israel’s involvement, but nothing came of them largely for political reasons. Once Hamas took over Gaza in 2007, attempts to move forward the possible exploitation of the gas field came to a halt. These were renewed in 2013 around the efforts, ultimately unsuccessful, by then-Secretary of State John Kerry to advance Israeli-Palestinian peace. Reported interest on the part of Russia and Energean Oil & Gas did not mature into concrete steps. Israeli Energy Minister Steinitz was quoted as telling participants of a January 2020 EMGF meeting in Cairo that contacts were underway between Israel and the Palestinians regarding possible gas sales to the PA in the West Bank, including the possible development of the Marine field. No additional details were announced and the Palestinian response was on the chilly side.

It is worth examining the interests of both Israel and the Palestinians in this regard. Israel’s interest in reaching an arrangement on Gaza to prevent further military clashes is obvious.

The Netanyahu government has in recent years expressed trust in possible long-term understandings with Hamas. Such a view fits in with the idea of “economic peace” that Netanyahu is promoting and is also in tune with the Trump plan (even though the plan is not expected to generate a real diplomatic process). In this context, there is also a convergence of interests between Israel and Egypt, which allows tight coordination of positions. Both states are interested in preventing escalation with Gaza and in progressing toward a longterm arrangement.

On the Palestinian side there are two players. The Hamas movement, which has adapted itself to the changes in the Middle East following the Arab Spring and to its room for maneuver vis-à-vis Egypt, is interested in an arrangement that would guarantee its control of the Gaza Strip. Hamas is seeking to achieve this goal in a way that would also provide it flexibility within the Palestinian arena in the future. As far as the PA is concerned, its weakness is clear, intensified by the waning days of Mahmoud Abbas. An arrangement over Gaza that would allow leadership by the PA, including progress on developing the Marine gas field, would serve its interests.

The obstacles and difficulties facing progress in developing the gas field are clear and significant. These include: Control of Gaza by Hamas, a terrorist organization and concern over empowering it at the expense of the PA; the absence of a diplomatic process between Israel and the PA and the deep mistrust between the sides; and the internal Palestinian political split between the PA and Hamas.

However, regional circumstances in the Eastern Mediterranean are creating an opening for positive change. In recent years, a roadmap for potential cooperation in this region is taking shape, based on the discovery of natural gas as well as the repercussions of the Arab Spring. The most prominent institutional expression of the emerging regional structure is the EMGF, established in Cairo in early 2019, which is undergoing international institutionalization this year. It currently includes seven members – Egypt, Israel, Greece, Cyprus, Italy, Jordan and the PA, and is supported by the EU and the US. The participation of the Palestinians in this forum is significant, and serves a clear Egyptian interest, which is also acceptable to Israel. The gas forum could serve to develop the Palestinian gas field from both a diplomatic and energy perspective.

From a diplomatic perspective – developing the gas filed under the umbrella of the EMGF could provide a convenient framework for the relevant players – Israel, the Palestinians and Egypt. It could be regarded, rightly so, as an expression of regional cooperation based on converging interests.

From an energy point of view – a possible link of the gas field to Egypt, which constitutes a key diplomatic and energy player, could help resolve various disagreements and sensitivities. Egypt is interested in boosting its status as a regional energy hub, which also serves the Israeli interest (for now). Shell, which sold its share in the Marine field is still active in the region (it holds a 30 percent share of the Cypriot Aphrodite gas field) and owns liquefaction facilities in Egypt.

What should Israel do?

Accelerate diplomatic moves to reach an arrangement over Gaza – this requires aligning positions and consulting with Egypt, and renewal of activity vis-à-vis Hamas and the PA, including on the issue of the Marine gas field development. Israel must restore trust with the PA and make it clear that it wants to restore the PA to a leading and more prominent role vis-à-vis the Gaza Strip;

Mobilize US support – Israel must update the US administration regarding its thinking on the development of the gas field as part of the arrangement with Gaza and ensure its support;

Create an economic-energy discourse on Palestinian gas – restore the development of the gas field to a high place on the agenda of the relevant players, including energy companies, and stir up their renewed diplomatic and economic interest in this issue;

Re-examine key issues – should Israel advance a direct link of the Gaza field to Egypt, for example to the pipeline through which Israel already exports gas to Egypt (if this is technically feasible) and thereby circumvent Palestinian disinterest and distrust of what could be considered an Israeli takeover of the gas? Can it be useful to also add a Cyprus angle to this endeavor, for example through involvement of Shell company?

Reaching a long-term arrangement between Israel and Gaza requires a complex and complicated process. Development of Gaza’s offshore gas field could and should constitute a concrete catalyst for such a process, as it addresses key interests of the relevant players. This idea also promotes a vision of regional, Mediterranean cooperation, in which the international community plays an important role in attempts to stabilize a bloody conflict.

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