Israel, Palestinian Authority agree to a gas pipeline to Gaza

Israel and the Palestinian Authority (PA) have concluded a deal to lay a gas pipeline from Israel to Gaza Strip, according to Globes, a business daily. There is still no formal announcement of the agreement.

According to sources within the PA Israel has agreed to the deal. The two sides will ask the contributing countries, who support the Palestinian authority, to finance the pipeline.

Last week during a visit to The Netherlands, Israel's prime minister Benjamin Netanyahu thanked his host, the prime minister Mark Rutte, for assisting in gas negotiations with the Palestinians. It was "… the first step is to improve the supply of energy, of water to Gaza, including laying a pipeline," Netanyahu said. "We have made a decision in our cabinet to do it and I appreciate your help in realising this project."

Despite the agreements with the PA it is not clear if the project will go ahead since Gaza is controlled by Hamas, a rival faction to the PA which controls the West Bank. Also the financial foundations of the PA and Hamas in Gaza are shaky.

This week the Israeli government concluded a deal with the PA to pay off a NIS 2bn ($500mn) electricity debt to Israel Electric Corp. About quarter or the debt will be erased, half of it will be spread into long-term repayment and the rest paid when the deal is closed. So the profitability of this project is not bullet proof and the motivation to realise it is more political than financial.

The project itself and the investment involved, shouldn’t be problems, however. The distance from the gas entrance point to the Israeli shore from Tamar gas field to the Israel-Gaza border is just a few dozen kilometres. 

Ya'acov Zalel