UPDATE: BG Group in 'secret' talks to develop Gaza-Marine gas field: report

Jerusalem (Platts)--14Mar2013/1016 am EDT/1416 GMT


The UK's BG Group is holding "secret talks" on the possible development of the Gaza-Marine offshore gas field, Israeli economic daily Globes reported Thursday.

A spokesman for BG told Platts the company does not speculate about "what we may or may not do with the assets in our global portfolio."

However, the spokesman noted that in 2007 the company withdrew from negotiations with the Israeli government for the sale of gas from Gaza-Marine, and in 2008 BG closed its office in Israel. An Israeli Energy and Water Ministry spokeswoman declined to comment on the report.

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The Globes report cited unnamed sources as saying the reservoir would be developed for use by Palestinians in the Gaza Strip and West Bank.

Gaza-Marine, located 35 kilometers (about 22 miles) off the Mediterranean coast of the Gaza Strip, was discovered by BG in 1999. The company owns a 60% stake in the field, which has estimated gas resources of 30 billion cubic meters. The Lebanon-based Houri family owns 30% and the rest is controlled by the Palestinian Investment Fund.

The cost of developing the field is estimated at around $2 billion and it is expected to take three years to bring it online once a decision is taken to develop it.

Discussions regarding Israel buying gas from the field have been held on an on-and-off basis for a few years. Two years ago, Prime Minister Benjamin Netanyahu officially asked Palestinian Authority President Mahmoud Abbas to resume negotiations on the sale of gas to Israel and its use by the Palestinians.

In September, BG denied it was involved in talks between Israel and the Palestinians over the development of the field. An energy ministry official said at the time that Israel supported the development of the field.

The Palestinian Authority has plans to build four gas-based power plants on the West Bank to end its almost total dependence on Israel for electricity.

Israel and BG ceased negotiations in December 2008 after failing to reach an agreement on price. Israel lost interest in purchasing gas from Gaza-Marine following the discovery of the huge Tamar field off the country's northern Mediterranean coast.

Israel has no formal relations with the Gaza Strip and imposed a blockade on the territory when the Hamas took over in 2007. The sources said an agreement between Hamas and Palestinian authority about future development would be necessary in order to proceed with any plans for the development of Gaza-Marine.

--Neal Sandler, newsdesk@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com