Greece's Energean Reportedly in Talks to Develop Gaza’s Natural Gas Fields

Sources say bringing Gaza Marine into production would benefit Israel, too

The Karish gas field.
AMIR COHEN/Reuters

Energean, the Green energy company that is developing Israel’s offshore Karish and Tanin oil fields, is negotiating with the Palestinian Authority to develop fields offshore the Gaza Strip, sources in the local energy industry told TheMarker on Sunday.

The sources said that the discussions have revolved around the commercial aspects of Energean’s taking over development of the fields after Royal Dutch Shell said in March it was giving up its stake in the undeveloped license.

Energean declined to comment. “Developing Karish and exploring the blocks adjacent to it are our highest priorities. We avoid commenting on rumors concerning our operations and when there is something to announce we will do so officially,” the company said.

Located about 30 kilometers off the Gaza coast, Gaza Marine has long been seen as a golden opportunity for the cash-strapped Palestinian Authority to join the Mediterranean gas bonanza, providing a major source of income to reduce its reliance on foreign aid.

However, no work advanced on the field amid repeated wars with Israel, the blockade and ongoing rivalry between Hamas and the PA over control of Gaza. Shell had been struggling to find a buyer for its 55% stake in Gaza Marine, which it took over as part of its acquisition of BG Group in 2016.

With Shell’s exit, the Palestine Investment Fund, a sovereign wealth fund, remains the sole shareholder. The field is estimated to hold over 30 to 35 billion cubic meters of natural gas, the equivalent of Spain’s consumption in 2016.

Israel’s Energy Ministry has reportedly been kept abreast of the talks, but refused on Sunday to comment on them. Any development of the field would require Israel’s approval, but at least one official said that Israel would benefit economically from it.

“The matter has been under discussion in the government for a long time. If they develop the Palestinian reservoir and it’s connected to Israel it would create competition for Tamar,” said one source, referring to Israel’s single gas field now in operation, a monopoly that has been the source of chronic controversy.

“It would also reduce the burden on Israel Electric Corporation, which today is supplying power to Gaza,” said the source, who asked not to be named. “It’s a small field, but the Gaza power plant has minimal needs. So whoever develops [Gaza Marine] will also want to sell Gaza gas to Israel.”

The source said that converting electricity generation to clean natural gas would also reduce air pollution in Gaza and ensure a more reliable energy supply to the enclave, which now gets only a few hours of power daily.

The only problem – and the source said it could be a fatal one – is that the PA would be entitled to royalties from the gas.

Although Gaza Marine is small, the gas doesn’t lie deep beneath the seabed and development could probably be completed within three years.

With reporting by Reuters.