Why Gaza Isn't Likely to Benefit From Gas Boom Anytime Soon

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The massive reserves of natural gas on Gaza's doorstep might seem like an obvious way to help fund the $6-billion rebuilding of the bombed-out coastal enclave.

There’s just one catch: extracting and selling the gas would require the cooperation of Israel. And with no sign of that, Gaza isn’t expected to reap the rewards of its own natural-gas bonanza anytime soon.

The reserves lying under the eastern Mediterranean could be a game-changer in a region where energy and politics are closely intertwined. The U.S. Geological Survey believes that as much as 120 trillion cubic feet of natural gas could exist under the Levant basin – enough to turn the countries along its coastline, from Turkey through to Egypt, into net gas exporters.

Israel has been quick to exploit this boom, with trickle-down benefits for American energy companies. Gas began to flow from one of its offshore fields last year, giving Israel’s economy such a boost that some called for a reduction in the $3 billion in annual financial assistance Jerusalem receives from the United States. Among the U.S. firms cashing in is Texas-based Noble - Israel’s largest foreign investor in gas – which employs 220 workers extracting gas from the Tamar and Meri B fields.

By comparison, Gaza’s share of the gas bonanza is modest – about 1 trillion cubic feet compared to Israel’s potential 30 trillion cubic feet. Still, it would be enough to help lift the enclave out of chronic economic deprivation and dependence on its neighbors.

But for that to happen, Israel would have to play ball.

When Gaza’s Marine 1 and Marine 2 gas fields were discovered in 2000, talks involving the Palestinian Authority began over how to develop the fields. When Hamas gained power in Gaza in 2007, talks stalled over Jerusalem’s fears that income from the gas would be used to fund terrorist attacks on Israeli soil.

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That has forced the British developer with rights to the field to put the project on hold and shutter its Israeli office. “We maintain contact with both the Palestinian Authority and the government of Israel," a spokesman for BG – formerly part of British Gas – told NBC News. “Unsurprisingly, there are no material developments to report at this time.”

"Nothing can go ahead without Israel's approval and it wants to avoid anything that can bolster the Hamas government"

The stalemate has prompted some to claim that Israel’s July 17 ground invasion of Gaza was a bid to snatch Gaza’s gas reserves from Hamas. In two widely shared blogs last month, including one for The Guardian, journalist and think-tank director Nazfeez Ahmed argued that Israel “desperately covets Gaza's gas as a cheap stop-gap” because its own emerging gas fields are not yet yielding enough energy to meet booming domestic demand.

While Israel insists the Gaza offensive was a military effort to destroy Hamas tunnels used for terrorist attacks, Ahmed alleged “the evidence is quite clear that gas is central to Israel’s intentions in Gaza, even if it does not explicitly say so.”

Israeli Defense Minister Moshe Ya’alon once wrote that any belief that Gaza's gas could create a more valuable Palestinian state was “misguided.”

“Proceeds of a Palestinian gas sale to Israel would likely not trickle down to help an impoverished Palestinian public,” Ya’alon said in a think-tank article. “Rather, based on Israel’s past experience, the proceeds will likely serve to fund further terror attacks against Israel. It is clear that without an overall military operation to uproot Hamas control of Gaza, no drilling work can take place without the consent of the radical Islamic movement.”

But even if Israel has no designs on the Gaza Marine fields it has done little to facilitate their development, one expert said.

“The obstacles are completely political,” said Valérie Marcel, associate fellow in energy, environment and resources at Britain’s Chatham House think tank. “Nothing can go ahead without Israel’s approval and it wants to avoid anything that can bolster the Hamas government. It’s a war of attrition that is basically robbing Gaza of the means for its economic development.”

That’s not to say there aren’t other regional complexities at play - which have been exacerbated by recent European sanctions on Russia. While Israel is looking to Europe for exports, the Palestinian Authority is pushing for a separate deal with Russia. Earlier this year, Palestinian President Mahmoud Abbas discussed a potential $1 billion tie-up with Russia’s Gazprom.

“Global actors are ready to exploit the Eastern Mediterranean [gas field’s] strategic implications,” said a report for the European Parliament published in April. “Russia aims to safeguard its gas monopoly, the United States to support its business interest, and Europe to increase its energy security and reduced dependence on Russia in light of the Crimea crisis.”

The report calls on Europe to “back the strategic triangle of Israel, Cyprus and Turkey as a first step towards the construction of an Eastern Mediterranean energy corridor.”

However, Turkey - which has condemned Israel’s military action in Gaza – said it would not allow itself to be used as a corridor for Israel’s gas exports until after a permanent cease-fire is reached. Turkey’s energy minister, Taner Yıldız, called for “an end to the cruelty in Palestine” and said his country’s “door will be closed” until calm is restored, according to English-language newspaper Hurriyet Daily News.

Until then, the residents of Gaza have more pressing concerns. Civilians in the impoverished enclave have not been able to trade or travel freely since Israel and Egypt imposed stringent border restrictions to prevent arms smuggling.

Lifting the border blockade - which Israel and Egypt argue is necessary for security but which has exacerbated poverty in the Gaza Strip - is one of the key sticking points in negotiations for a long-term truce.

Until a lasting cease-fire is reached, rebuilding Gaza must wait. And without free border movement, Palestinians cannot export basics such as fish - let alone natural gas.