BG Group to Supply Gaza Gas to Israel

This is a really hot political potato. The British BG Group is poised to agree the terms of an historic $4 billion deal to supply Palestinian gas to Israel from a discovery off the Gaza coastline.

Representatives from BG are due to thrash out a 15-year contract with the Israeli Cabinet next week. Despite the violence in Gaza, the Israeli Foreign Ministry has insisted that it wants to conclude a deal “as soon as possible”.
The deal would mean that BG would develop an offshore field that is the Palestine Authority’s only natural resource. Although the Palestinians would receive royalties of some $1 billion, the gas would provide 10 per cent of Israel’s annual energy requirement.
Although Israeli insiders are said to be confident of a deal, significant questions remain, not least how payments to the Palestinian Authority will be made. Israeli Defence chiefs are said to want the Palestinians to be paid in goods and services and insist that no money go to the Hamas-controlled Government.
There may be trouble ahead..