How is Gaza Offshore Gas Development Tied to the Israeli Invasion?

Gaza Marine is a gas field offshore from Gaza that is supposed to be under Palestinian jurisdiction, but Israel has blocked development. Credit: UNCTAD.

A common thread seems woven through the world’s major conflicts, access to fossil fuels. Ukraine is rich in coal, oil and gas. The South China Sea has major undersea reserves of oil and gas. The current conflict in Gaza is no exception. Significant deposits of gas exist in an offshore area that is supposed to be under Palestinian jurisdiction, but Israel has taken control and held back development.

Gaza Marine with an estimated 1.4 trillion cubic feet of gas is 17 to 21 miles offshore. The area up to 20 miles from the coast was placed under the Palestinian National Authority (PNA) by the 1995 Oslo II accords. But Israel has blocked development, and the complex politics between Hamas which controls Gaza and Fatah which controls the PNA have played into a twisted path of on-again-off-again negotiations around drilling.

The British Gas Group (BGG) discovered the field in 1999 and signed a 25-year contract with the PNA to exploit it. The PNA saw it as an opportunity to supply its own energy, including electrical power, and gain export revenues. Under Israeli Prime Minister Ehud Barak, the drilling was approved. BGG sought to negotiate a purchase deal with Israel Electric Corporation, but that was nixed by incoming Prime Minister Ariel Sharon. That decision was again reversed in 2002 through intervention by the UK, and Sharon agreed to begin negotiations on an agreement that would have supplied 0.05 trillion cubic feet for 10-15 years. But Sharon got cold feet and shut down negotiations. The money could be used to fund terrorism, he claimed.

A new government led by Ehud Olmert in April 2007 revived the deal. Of the $4 billion expected to flow from the deal, $1 billion was to go to the PNA. But elements of the government were raising objections. The Hamas takeover of Gaza in 2007, and its break from the Fatah-controlled PNA on the West Bank, had changed the picture. Hamas was pressing for a better deal.

“In September 2007, a former Israeli chief of staff strongly advised the Government of Israel not to conclude an agreement with BGG on the grounds that Israel’s transferring $1 billion ‘into local or international bank accounts on behalf of [PNA] would be tantamount to Israel’s bankrolling terror against itself,’” reports the United Nations Commission on Trade and Development (UNCTAD). The Israeli government moved to strike a deal with BGG that would keep cash out of the hands of the PNA and instead pay it in goods and services, effectively cancelling the 1999 agreement.

BGG withdrew from negotiations at the end of 2007. Israel unsuccessfully tried to re-engage the firm in 2008 to close a deal, it is thought on an expedited basis before Israel’s planned Operation Cast Lead military incursion into in Gaza in December 2008. “In the wake of the operation, Palestinian natural gas fields were effectively brought under Israeli control without regard for international law,” UNCTAD says.

The costs to Palestinian people

In its 2019 report, The Economic Costs of the Israeli Occupation for the Palestinian People: The Unrealized Oil and Natural Gas Potential, from which the above quotes are drawn, UNCTAD concluded, “In 2018, 18 years had passed since the drilling of Marine 1 and Marine 2. Since PNA has not been able to exploit these fields, the accumulated losses are in the billions of dollars. Accordingly, the Palestinian people have been denied the benefits of using this natural resource to finance socioeconomic development and meet their need for energy over this entire period, and counting.”

UNCTAD noted, “The Marine 1 and Marine 2 reserves were discovered in 1999 and BGG drilled for gas in 2000. Palestinians could have hypothetically monetized these fields and invested the net value of $4.592 billion for 18 years now. Assuming a low annual real rate of return of 2.5 per cent, Palestinians have already lost roughly $2.570 billion through prevention of the exercise of their right to benefit from the exploitation of their natural resources, guaranteed under international law. The longer Israel prevents Palestinians from exploiting their oil and natural gas reserves, the larger the opportunity costs of these reserves and the larger the costs of the occupation borne by Palestinians become.”

Gaza Marine is dwarfed by another resource, the Meged oil and gas field situated largely under the West Bank. It was found in the 1980s. Production has taken place since 2010. The value of the estimated 1.5 billion barrel field was put at $99 billion by UNCTAD at a $65/barrel rate. Removing production costs, the estimated loss to Palestinians was put at $68 billion. At the current OPEC price of $79/barrel, the overall field value would be nearly $120 billion, and the net after costs would be $84 billion.

Fossil fuel reserves in the Palestine-Israel region are massive. UNCTAD notes, “Levant Basin Province encompasses approximately 83,000 km2 of the Eastern Mediterranean. . . . USGS has estimated a mean (average) of 1.7 billion barrels of recoverable oil and a mean of 122 trillion cubic feet of recoverable gas in the Levant Basin Province. This means that this basin is one of the most important natural gas resources in the world.”

Some of those resources are in international waters, but the overall figures underscore that Israel’s appropriation of land and resources formerly belonging to the Palestinians has deprived them of major economic opportunities. One can argue whether in a time of climate chaos these resources should be developed at all. But the fact is they are being developed, and the Palestinians are being cut out of the deal.

Gaza Marine returns

Over the last several years, the Gaza Marine prospect has been revived in a way that has stirred suspicions that Israeli authorities deliberately ignored warnings about the October 7 Hamas attack. For development would entail getting Hamas out of the way in Gaza. In March 2021, the Palestinian Investment Fund, a branch of the PNA, and the Egyptian government signed a memorandum of understanding aimed at developing the field. But Hamas representatives raised objections.

“Our people have the right to know how the authority behaves on major issues because precedent confirms that it acts without the slightest degree of transparency, and determines its actions and relations based on narrow partisan and factional interests,” Hamas spokesperson Hazem Qassem said.

Moussa Abu Marzook, deputy chairman of Hamas’s Political Bureau, tweeted, “Gaza must be present in any understandings about the gas fields on its shores. If Gaza is forced to import natural gas from the occupation [Israel] for the only power plant in the strip, then we should not stand by while our natural resources are exported to far-off lands. We need to know the details of the agreement that was signed with the Investment Fund.”

(This plant is now shut down because of Israel’s blockade of fuel to Gaza.)

Then on June  18 2023, a little under 4 months before the attack, after many years when Gaza Marine was sidelined, Israeli Prime Minister Benjamin Netanyahu announced plans to move forward on development in conjunction with the PNA and Egypt. It had been reported that secret talks on development had been taking place between Israel and the PNA the prior month.

The Cradle reported, “According to Netanyahu’s office, the plan will emphasize ‘Palestinian economic development and maintaining security and stability in the region.’ The plan is ‘subject to coordination between the security services and direct dialogue with Egypt, in coordination with the PA.’ Plans to develop the field were among the main topics of discussion during recent security meetings between Israel and the PA in Aqaba.”

Israel has clearly been interested in building up the PNA,  regarded as complicit in Israeli occupation, as an option to Hamas. A deal that puts money in PNA’s pocket furthers that aim, and buys off further complicity. But it is equally clear that gas development off the Gaza coast could not proceed with Hamas’ objections. Hamas would want a share of the revenues, which would be unacceptable to Israel. Hamas would somehow have to be taken out of the picture.

Gaza Marine is relatively small compared to other offshore gas fields being developed by Israel. Its reserves amount to 38 trillion cubic feet. But developing Gaza Marine to further buy the PNA’s complicity is where the recent moves toward development seem tied to the invasion and attempt to eliminate Hamas. That is the apparent fossil fuel connection to this conflict. Seen as part of a larger strategy to elevate and buy off the PNA while eliminating Hamas, this would be one more incentive to ignore the warnings and intelligence reports that accurately predicted Hamas’ October 7 actions.

Next: How is the proposal for the Ben Gurion Canal tied to the Gaza invasion?

This first appeared in The Raven.