Off shore gas well could give financial windfall to PA

Washington Times:

Israel is in advanced negotiations with British Gas to purchase natural gas from underwater fields off the Gaza Strip in a deal that could lead to a $38 million annual windfall for the Palestinian Authority.
The talks are being held despite Israel's political and financial boycott of the Hamas-led Palestinian unity government over the Islamist-controlled Cabinet's refusal to forswear violence and recognize Israel.
Officials close to the talks said the negotiations will include a financial mechanism to prevent money from the gas purchase from reaching Palestinian militants.
"We have an interest to bring it, and [British Gas] has interest to sell it. It's an issue of price," said a government official who spoke on the condition of anonymity. "Everything else will work itself out."
During the heyday of the 1993 Oslo peace accords, such an energy deal would have fired hopes that Israeli-Arab economic interdependence could stifle political and religious rancor.
The fact that the talks are going forward today, amid a boycott and cross-border violence in and around Gaza, is an indication of the power of economics over politics.
The anticipated contract for 37 billion cubic meters of gas could be worth $5 billion over a 15-year period, according to an industry source. However, the gas isn't expected to begin flowing until 2011.
Representatives of British Gas met with representatives of Israel's Finance and National Infrastructure ministries last week after the Israeli Cabinet approved in April the opening of formal talks on the deal, said a spokeswoman for the infrastructure ministry.
"There is progress in the talks," said Michael Levy, a spokesman for British Gas in Israel. "We feel that we can finish talks soon."
After obtaining the rights to develop energy resources off the Gaza shoreline, British Gas in 2000 discovered a commercially viable subterranean field about 20 miles from the coast. Under the concession, the Palestinian Authority gets 12.5 percent of the sales income as royalties.
Israel, which is shifting to natural gas from coal fuels, has taken an interest in the discovery with the goal of diversifying its energy suppliers.
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It is also a way of controlling the flow of funds to the Palestinians. This is actually bad news for the Palestinians, because it only moves them from being a beggar society to being an oil tick society and does not address their major problem of having no productive enterprise beyond the creation of human bombs as ordinance in their genocidal war with Israel.