At the end of the summer, the Italian energy giant Eni discovered one of the largest gas reserves in the Mediterranean. Just off Egyptian shores sits Zohr, a gas field with a staggering 30 trillion cubic feet of natural gas. As Egypt celebrated the good news, Israel panicked about the implications of the discovery on its much-touted Leviathan gas field, which was discovered in December 2010. It was a “painful wake-up call,” the Israeli energy minister, Yuval Steinitz, said.
Why? Eni’s discovery could possibly return Egypt, which significantly reduced gas exports in 2012, to its role as a regional gas exporter. This threatens Israel’s aspirations to position itself as the region’s energy powerhouse. For one, the rationale underpinning the $15 billion gas deal signed between Jordan and Israel last year now appears weak: Jordan, which sought to substitute for the drop in Egyptian resources, may now decide to turn to Cairo for a less controversial source of gas.
For Palestine, however, which has also been in gas negotiations with Israel, these regional changes have little impact. With nearly total dependency on Israel for its energy needs, Palestine is seeking ways to enhance the quality of life under occupation. Gazans are seeking to import gas from the southern Israeli city of Ashkelon to alleviate suffering and reduce power shortages, while the West Bank is discussing with Israel the import of gas to increase local power generation and reduce electricity costs.
These short-term measures, while necessary as a stopgap, come at the expense of Palestine’s ability to assert its sovereignty over its own natural resources—the Marine gas fields off the Gazan coast and the Rantis gas field in the West Bank—and may in fact undermine prospects for long-term energy independence.
RUNNING ON EMPTY
Over the summer, I visited both the Gaza Strip and the West Bank and spoke to a number of officials in the energy sector. Like Jordan, Palestine was affected by the loss of Egyptian gas. It currently purchases around 88 percent of its electricity from Israel. The only active power plant in the Palestinian territories is the Gaza Power Generation Company, located in the Gaza Strip, south of Gaza City. This generates around ten percent of the total electricity needs for the Palestinians, although it currently serves only Gaza. It operates using fuel that is often imported from Israel.
This summer, electricity in Gaza was rationed to eight hours a day, although in reality that amount often dropped significantly whenever demand increased—for instance, when Gazans turned on their air conditioning. Quite frequently, close to 70 percent of the strip would be out of power. Visitors would call in advance to make sure the lights were on before coming over, fearing a tedious hike up several flights of a high-rise building, or, as was the case when I visited during Ramadan, having to break the fast with a cold iftar meal.
These short-term measures, while necessary as a stopgap, come at the expense of Palestine’s ability to assert its sovereignty over its own natural resources...and may in fact undermine prospects for long-term energy independence.
Many pin Gaza’s electricity crisis on its mismanaged power plant. “The power plant is a catastrophe on the Gaza Strip,” a senior staff member from the Palestinian Energy and Natural Resources Authority (PENRA) in Gaza told me. “If the Gaza Power Generation Company was not present, we would be importing our electricity directly off of the Israeli grid.”
Although the Gazan power station is a privately owned company, the Palestinian Authority took charge of sourcing the fuel that is required to operate the plant. In 2000, the plant opened after the discovery of 1.4 trillion cubic feet of gas in the Gaza Marine field. At the time, it was thought that Palestine could perhaps achieve energy independence and supply the plant with gas from local fields. But a few years later, those hopes were dashed. The Palestinian Authority has been unable to tap Gaza Marine because Israel continues to place restrictions on its use. Instead, the Palestinian Authority has turned to liquid fuels, primarily diesel, which is two to four times more expensive than gas for generating power. Unsurprisingly, the company has developed a severe budget deficit of nearly $360 million.
The Palestinian Authority is often blamed directly for high fuel costs and subsequent energy shortages. To source fuel for the power plant, the government in the West Bank has invariably become a clearing house of sorts, purchasing diesel from Israeli suppliers and selling it to the power plant in Gaza after imposing a fuel tax. It is unclear how these taxes, much reviled by Gazans, are calculated or imposed, but PENRA in Gaza estimates that the fee is around 40 percent. In addition, PENRA and the Gazan Power Generation Company say that the Palestinian Authority imposes arbitrary and opaque cost-adding measures, such as inflating the cost of fuel, to make up for the taxes that Israel places on the diesel imports. The absence of an audit trail makes it impossible to check the veracity of these claims.
The exorbitant fuel costs have forced the plant to run at curtailed capacity. Payment for fuel has also come at the expense of other important investments, such as developing Gaza’s metering and transmission networks. (The system is so ineffective that it has reportedly resulted in close to $860 million in uncollected bills over the years.) The power company also needs $45 million to repair the damage from the June 2014 Israeli offensive against Gaza, which destroyed the plant’s fuel tanks as well as extensive parts of its electricity distribution networks.
To deal with the chronic blackouts and to alleviate the suffering of Gazans, who took to the streets in protest this summer, the Palestinian Authority in the West Bank approved the development of a gas pipeline from Ashkelon to the Gazan power plant. It will be funded by the Qatari government, which submitted its development plans (reportedly with the Palestinian Authority’s willingness to pay for the cost of gas) to Israel earlier this month. By linking the power plant directly to a source of gas, PENRA officials in Gaza say that all of Gaza’s power needs could be eventually met. Israel is still mulling over the possibility of approving this line.
While this deal increases reliance on Israel, one Hamas official was privately nonchalant about such concerns. “This is a humanitarian situation. It is just the way geography works. The enemy has gas,” he told me.
Activists within the West Bank felt differently. Last year, the West Bank’s Palestinian Power Generation Company, yet to come online, struck a deal with Israel to import gas into the West Bank in order to develop local power generation and reduce the cost of electricity. The Palestinian public heavily protested the agreement, which it saw as a symbol of normalization with the occupation. Soon after, the deal was dismissed. Activists from the Boycott, Sanctions, and Divestment movement took credit for pressuring the Palestinian power company to back off of the deal.
Palestinian officials in the West Bank dismissed such claims. “The deal fell through because of price disagreements,” Fuad Amleh, the assistant chairman for planning and information at the Palestinian Energy Authority in the West Bank, told me. “In fact, [negotiations] are still ongoing to this day. The Palestinian Power Generation Company is seeking to secure Israeli gas for an expanded power plant.
The Palestinian Power Generation Company believes that it is now in a stronger negotiating position and will be able to overcome these price disagreements. The company attributes its positive outlook to its conviction, shared among West Bankers as well as Gazans, that Israel is more serious about permitting the production of gas from Gaza Marine.
There have been no official statements from the Israelis to confirm this. But individuals with insight into the negotiations surrounding Gaza Marine have told me that there is indeed a push, and a perceived softening on the Israeli side, to allow for this field to begin production. A few people I spoke with estimated that it will take roughly 30 months to bring the Gaza Marine into operation.
Of course, there are fears that relying on Israeli gas could undermine Palestinian energy security, since Israel could easily turn off the taps. Previous instances, in which Israel withheld tax revenue from the Palestinians, set a notable precedent for such behavior. But these concerns were quickly dismissed. “The Palestine Power Generation Company is negotiating with the Israeli private sector, not the Israeli government. There will be no political meddling in the provision of gas,” Amleh told me.
Officials from both the West Bank and Gaza have justified these gas deals as a means to lay the groundwork for future Palestinian energy independence. The pipeline from Ashkelon to Gaza would eventually be used to transport gas from Gaza Marine to the beleaguered strip. Similarly, Israel may even approve the transport of gas through its infrastructure from Gaza Marine to the West Bank. Seen in this light, the agreements with Israel are regarded as mere stopgaps until Palestinian gas is finally released.
Given the history of efforts to excavate Gaza Marine, these plans carry with them the risk that no gas will, in reality, be produced, in which case the Palestinians would have negotiated themselves into permanent energy reliance on Israel. As mentioned earlier, there is perhaps some indication that Israel is indeed “softening” with regard to this field. First, Gaza Marine is now a strategic asset. Israel’s fear that Egypt’s Zohr field will monopolize the regional market could drive it to use Palestinian gas to act as a “sweetener” to Israeli gas, making it more palatable to otherwise hostile clients. Second, Gaza Marine could play an important role in stabilizing Gaza, a goal that is gaining importance in Israel.
In any case, the Palestinians appear willing to proceed with these risks in mind. Efforts to assert sovereignty over other sources of gas, namely the Rantis field in the West Bank, appear nonexistent. Despite assurances from officials that this gas field is “being dealt with at the highest levels of government,” there is no indication that this might be the case.
Perhaps justly, the Palestinian leadership is pursuing short-term measures to alleviate the suffering of its people. In the absence of a political settlement, economic concerns have become paramount. I asked Palestinian officials whether there was a fear that closing such deals could entrench the occupation and the continued blockade of Gaza.
“Yes, of course,” a senior official in the West Bank told me. “But the people want to live.”