Agreement signed earlier this month involving Israel’s natural gas field and Palestinian power firm, may need top-level gov’t support to succeed.

By Reuters

A billion-dollar deal signed this month involving an Israeli natural gas field and a Palestinian power firm marked a rare private-sector victory over political conflict, but it may need top-level support to succeed.

The Tamar gas rig off the coast of Israel – Photo: Albatross Aerial Perspective/AP

Palestinian officials say implementation will depend on guarantees by the governments of both sides, whose mutual distrust has grown amid troubled US-backed peace talks.

The deal’s Palestinian backers say Israel has pledged that any future political or security crisis will not interrupt the gas supply. No such assurance has been made publicly, however.

“There was a kind of guarantee from top levels in Israel … that there would be a continuous flow of gas no matter what happens on the political front,” said Samir Huleileh, CEO of the Palestine Development and Investment Inc holding company.

PADICO holds an 18 percent stake in the Palestine Power Generation Company (PPGC) at the centre of the deal, which Huleileh said had received the guarantee from Israeli Prime Minister Benjamin Netanyahu‘s office less than a year ago. Netanyahu’s office did not respond to a request for comment.

Under the agreement, PPGC is to buy $1.2 billion of gas over 20 years from the US-Israeli group developing the huge offshore Leviathan gas field.

At a signing ceremony on Jan. 5, Israeli billionaire Yitzhak Tshuva, whose Delek Group is a major stakeholder in Leviathan, hailed the deal as historic and said it would bolster peace efforts. Delek officials, however, declined to speak to Reuters on any Israeli political backing for the deal.

Palestinian Deputy Prime Minister Mohammed Mustafa said his government looks favorably on the agreement, but that final approval would come only after it had seen the text of the contract and studied Israel’s political commitments.

The Palestinian Authority exercises limited rule in the occupied West Bank, captured by Israel in 1967 along with the Gaza Strip and East Jerusalem. The Palestinians want that land for a future state.

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