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Who will win Israel’s oil and gas war? Netanyahu spies an untapped energy market in Europe

Smoke billows from an oil facility in the southern Israeli city of Ashkelon (MOHAMMED ABED/AFP via Getty Images)

Smoke billows from an oil facility in the southern Israeli city of Ashkelon (MOHAMMED ABED/AFP via Getty Images)


December 5, 2023   5 mins

When we talk of the Israeli-Palestinian conflict, we tend to focus on the latter’s political, social and humanitarian dimensions. But often this comes at the expense of considering an important economic dimension — one which recent events in Gaza have brought into stark relief.

Perhaps the most financially destructive aspect of any military occupation is the appropriation of natural resources. And Israel’s is no exception. Most obviously, this has assumed the form of Israel taking control of (or rendering inaccessible to Palestinians) much of the West Bank and Gaza’s cultivable land and water supplies. In other words, despite the establishment of the Palestinian Authority (PA) in the Nineties, the Palestinian people have never truly had control over their resources and their economy. This, on top of severe restrictions on the movement of people, labour and goods, has taken a very heavy toll on the Palestinian economy.

Less well-known, however, is Israel’s appropriation of the Palestinian Territory’s vast reservoirs of oil and natural gas. On its border with the West Bank, for instance, lies Israel’s largest onshore oil field, which Israel states is located west of the armistice line of 1948 — even though most of it is situated beneath Palestinian territory occupied since 1967.

Yet the site of the most controversial “energy war” between Israel and Palestine is not in the West Bank — but Gaza. In 1999, British Gas Group (BGG) discovered a large gas field (Gaza Marine) at a distance of 17 to 21 nautical miles off the coast of Gaza. This placed it within the bounds of the Oslo II Accord, signed in 1995, which gave the PA maritime jurisdiction over its waters up to 20 nautical miles from the coast. Following the discovery of the gas field, the PA signed a 25-year contract for gas exploration with BGG, and, in 2000, the company drilled two wells in the field, which was estimated to contain 1.4 trillion cubic feet of natural gas — more than enough to satisfy the Palestinian Territory’s energy needs, and generate significant export revenue flows.

It looked like, after much misfortune, the Palestinian people had finally struck gold. On 27 September 2000, after symbolically lighting the flame at the BGG offshore exploration platform, Yasser Arafat, then president of the PA, hailed the discovery as “a gift from God”, one which would “provide a solid foundation for our economy and for establishing an independent state”.

God, however, had other plans: within two days, the Second Intifada had broken out. And the following year, Ariel Sharon, an ultranationalist, won the elections and used the unrest to block the Gaza Marine development project, claiming the profits risked being channelled to Hamas and other militant groups.

In the following years, little was done to bolster the Palestinian economy. Instead, successive Israeli governments insisted that the gas be piped to a refinery located within their territory, thus giving Israel control over the revenues from the Gaza gas fields. In the early 2000s, even Tony Blair, then prime minister, got involved, convincing the Palestinians to agree to send the proceeds from the natural gas reservoirs to the Federal Reserve Bank in New York to be vetted, to ensure that the money didn’t fall into the hands of armed resistance groups.

But Israel continued to drag its feet — and finally broke off all negotiations following Hamas’s takeover of Gaza in 2007. A crucial turning point came the following year, when Israel launched a military operation in the strip, after which Israel militarised the entire Gazan coastline and effectively brought under its control the Gaza natural gas field, in contravention of international law. From that moment onwards, BGG started dealing directly with the Israeli government. But for several years, largely due to recurrent hostilities between Israel and Hamas, there was hardly any progress on the project.

This has resulted in accumulated losses to the Palestinians in the billions of dollars. “The occupation continues to prevent Palestinians from developing their energy fields so as to exploit and benefit from such assets,” the United Nations Conference on Trade and Development observed in 2019. “Accordingly, the Palestinian people have been denied the benefits of using this natural resource to finance socioeconomic development and meet their need for energy over this entire period, and counting.”

After Russia’s invasion of Ukraine, however, the project was revived. As Europe started desperately scouring the world for alternatives to Russian gas, Netanyahu saw a perfect opportunity to crown his long-held dream of transforming Israel into a regional energy hub and major energy exporter. This is a fairly recent development. Since its creation in 1948, Israel has been heavily dependent on energy imports from other countries.

In 2009 and 2010, however, Israel discovered two massive natural gas fields off its coast, in its self-declared exclusive economic zone: the Tamar and Leviathan gas fields, with overall estimated reserves of around 30 trillion cubic feet of natural gas. This markedly shifted the regional gas market’s geopolitical dynamics: in a decade, Israel went from net gas importer to exporter — mostly to Egypt and Jordan.

However, the real market Israel has always eyed is Europe. To this end, several pipeline projects have been considered — including an offshore pipeline from Israel to Turkey, which would then link up with the Baku-Tbilisi-Ceyhan (BTC) pipeline, and the so-called EastMed pipeline, which would connect Israel to mainland Greece via Cyprus and then meet the proposed Poseidon pipeline running across the Ionian Sea to Italy.

The Russia-Ukraine war gave fresh impetus to all these projects — including the development of the Gaza Marine field. In June, Israel gave preliminary approval to a $1.4 billion project involving the Palestinian Authority, Egypt, Israel and Hamas aimed at developing the Gaza gas reserves. Under the agreement, revenue — estimated to reach $700-800 million a year — would have gone to the PA with an agreed portion used to support Gaza’s economy. The project was hailed as “a rare glimpse of a potential win-win opportunity” for both Gazans and Israelis.

Unsurprisingly, the re-explosion of the Israel-Hamas conflict has put the deal on hold once again — and it’s hard to see how it could be revived soon, given the lack of any political solution to the war on the horizon. Indeed, several commentators have argued that seizing control of the gas field is the real reason behind Israel’s war in Gaza. Seyed Hossein Mousavian, a Middle East Security and Nuclear Policy Specialist at Princeton University, recently wrote that “the ultimate objective is not only to demolish Hamas and/or exclude Palestinians from their homeland, but to confiscate Gaza’s multi-billion-dollar gas resources”.

Frankly, this argument doesn’t hold: as noted, Israel already effectively controlled the Gaza coastline, including the gas field, prior to the conflict. Moreover, the reserves contained in the Gaza Marine field pale in comparison to those of the massive Leviathan and Tamar fields, Israel’s main gas resource. And indeed, it is in the Leviathan field that the Israeli Energy Minister recently granted 12 licences to six companies, including BP and Italy’s Eni. In reality, then, the Gaza Marine field seems rather tangential to Israel’s energy policy and its grand geo-strategic plans.

And yet, it does remain crucial to the future of Israeli-Palestinian relations. This is why the US is now pushing Israel to revive the deal. “There is an opportunity here to develop the gas fields in offshore Gaza, on behalf of the Palestinians,” Amos Hochstein, Biden’s energy security advisor, said during a visit to Israel last month. Hochstein noted that he was “100%” sure Israel would allow this, adding that “there is no reason for them not to — it is not theirs [the Israelis], the gas belongs to the Palestinian people”.

As desperate as the Biden administration may be to avoid the conflict escalating into an all-out regional war, Hochstein’s words are little more than wishful thinking. For decades, it’s been clear that, as long as a lasting political settlement is out of reach, the gas off Gaza’s coast will remain under the sea and out of Palestinian control. Witness today’s war, and one can only conclude that their desire for development will remain thwarted.


Thomas Fazi is an UnHerd columnist and translator. His latest book is The Covid Consensus, co-authored with Toby Green.

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Paul MacDonnell
PM
Paul MacDonnell
4 months ago

This is quite an informative article. But it is also spectacularly naive.
First of all, any reference to areas where the Palestinians have agency or control over their own destiny and which they have, predictably, completely messed up, is in the passive voice only. Compare, for example, the first sentence in this paragraph with the second:
“1. God, however, had other plans: within two days, the Second Intifada had broken out. (Passive voice: Palestinian Arabs not responsible. Also no adjective describing Hamas’ politics).
“2. And the following year, Ariel Sharon, an ultranationalist, won the elections and used the unrest to block the Gaza Marine development project, claiming the profits risked being channelled to Hamas and other militant groups.” (Active voice: Israel is responsible. Also adjective describing Sharon as “ultranationalist” — code for “culpable and a bit like HItler”).
Profits could be channelled to Hamas? A tendentious claim according the author. I’d call it a blindingly obvious certainty.
He goes on to quote the UN as if it is some kind of authority. It’s about as reliable as Hamas.
The second problem is the notion that massive resource wealth in the hands of the governments of Gaza or the West Bank will improve the lot of the Palestinian Arab people. This is so stupid, it doesn’t even require a response.

Last edited 4 months ago by Paul MacDonnell
mike otter
mike otter
4 months ago

This guy’s name provides a large number of abusive and insulting anagrams in Italian & Spanish. A classic porta-vox he can’t even claim he’s doing it for reasons of conscience – have you seen his net worth ! $16M according to the internet. As a humble multi- millionaire i can’t help but admire his ability to acquire wealth – he has considerably more on his own than the 3 richest people in our road combined. What i don’t get is where the £s came from – clearly not from copy sales, and obvs not from the Israeli state! If we can restore the rule of law we may be able to find out.

UnHerd Reader
UnHerd Reader
4 months ago
Reply to  mike otter

Whose name are you referring to? and where did you find evidence for your assertion?

Stephanie Surface
Stephanie Surface
4 months ago
Reply to  mike otter

Who is “this guy”? Fazi or MacDonnell?

UnHerd Reader
UnHerd Reader
4 months ago

If we consider a long-term future of Palestine and Israel, we should take in account the fact that Hamas could no longer exist, just if fair conditions were offered the Palestinian people. Do not forget that not only Hamas was created by Israel to divide them in two areas (Gaza & West Bank) but that Hamas itself was ready to give up its purpose of destroying Israel.
Humanitarian views can only favour a successor to both Hamas and the PNA in the occupied territories, a body which would truly defend its people’s interest while signing a Peace Treaty with Israel.
It looks quite unrealistic just now, since the war is sowing an eternal desire of vengeance on the Palestinian side.
But one day, granting fair conditions to the Palestinians will be the only alternative to a never-ending conflict. And exploiting their own oil & gas reserve would be part of them.

El Uro
El Uro
4 months ago
Reply to  UnHerd Reader

You are persistently afraid to see that this is not a territorial conflict. This is a religious conflict that Western Europe has already lost and America is intended to lose.

Lesley van Reenen
LV
Lesley van Reenen
4 months ago
Reply to  UnHerd Reader

But most Palestinians support Hamas. Hamas has the extermination of Israel in its charter. I think you are naive.

Samuel Ross
Samuel Ross
4 months ago

Well said, sir. Your answer is a life lesson on how to read between the lines and recognize bias implicit in words. Poets, lawyers, politicians, and ‘journalists’ all know the power of words and ‘which word’ makes the most sense and influence, etc.

Samuel Ross
Samuel Ross
4 months ago

The ‘West Bank’ is Judea, the ancient land of the Jews.
The Jews are from Judea, where the Judean mountains runs along the spine of Israel, where the tribe of Judah had its tribal allotment. The Jews are the native people of the Holy Land. The ‘Philistines’ came from the Greek Isles, originally; these modern ‘Palestinians’ have no relation to them at all. They are Persian, Egyptian, Bedouin, Turkish, Syrian, and Arabian, mostly.
The term ‘West Bank’ is a modern term with no historical significance. There was never a country called ‘Jordan’ before the modern state of Jordan was created out of whole cloth by Great Britain using 75% of the ‘mandate for Palestine’.

Tony Price
Tony Price
4 months ago
Reply to  Samuel Ross

Didn’t the Jewish people come from Egypt, led by Moses across the Red Sea, which makes them not native to ‘Judea’? Or have I got that wrong? Genuine question as I am not up to scratch with the history.

JR Stoker
JS
JR Stoker
4 months ago
Reply to  Tony Price

Read the Old Testament from the beginning! The Jews were returning home from captivity in Egypt

Charles Stanhope
CS
Charles Stanhope
4 months ago
Reply to  JR Stoker

Is the Old Testament really a credible source? Or merely a downmarket equivalent of the Iliad?

D Walsh
DW
D Walsh
4 months ago

It doesn’t seem to make a difference. Most zionists are atheists, but at the same time they believe God promised them Israel

Last edited 4 months ago by D Walsh
Lesley van Reenen
LV
Lesley van Reenen
4 months ago
Reply to  D Walsh

Rubbish squared.

Dumetrius
Dumetrius
4 months ago
Reply to  D Walsh

There’s apparently a guy whose son was a 9/11 hijacker, who goes on about him as a Jihadi & martyr in one breath, yet in the next, will tell you that the CIA did the whole thing.

Consistency is overrated.

Last edited 4 months ago by Dumetrius
Samuel Ross
Samuel Ross
4 months ago
Reply to  D Walsh

Then by definition they are not Atheists, because they believe in the God of Israel.

R Wright
R Wright
4 months ago

If it is in my interests to claim land any national epic I deem appropriate will be credible.

Pedro the Exile
P
Pedro the Exile
4 months ago

Well,the Muslims have no issue quoting the Koran as an unarguable source-in fact,to deny its veracity is to court death.

Charles Stanhope
Charles Stanhope
4 months ago

“A plague on both your houses” as the great Bard would say.*

(R&J Act III Scene I.)

Dumetrius
Dumetrius
4 months ago

If only all those early mosques hadn’t pointed to Petra, then Jerusalem … unarguable becomes arguable fast.

Last edited 4 months ago by Dumetrius
Barry Stokes
Barry Stokes
4 months ago
Reply to  JR Stoker

You got there before me. Such ignorance is all too common these days I’m afraid

UnHerd Reader
UnHerd Reader
4 months ago
Reply to  Samuel Ross

Etymology here plays an easy role. Where did the Jews come from, when they destroyed Canaan? You will always find a predecessor.
Read Shlomo Sand, you will understand that the modern Palestinians descend directly from those Jews that the Roman supposedly expelled. In fact, the inhabitants were converted to Christendom, later a large part of them to Islam (a few may have preserved their original faith, in the same proportion as elsewhere in the Middle East).
On the other hand, the Jewish diaspora was essentially built by converted people from everywhere, between the Mediterranean and the Khazar Empire, since antiquity to the Middle Age. Shlomo Sand’s figures are quite coherent.
Anyway, that’s not the point. In 1948, 700,000 Palestinians living in Judea had to flee: does it really matter how long they had been there? is it plausible that so many people had just arrived from the desert? No, the ‘Bedouin” origin is just a myth. re: the other supposed origins, how could that rather small place have been such an immigration land from the neighbouring countries? Another myth!
Both populations, Arabs and Jews, must agree to share their land…

Susan Grabston
Susan Grabston
4 months ago
Reply to  UnHerd Reader

Thank you. Yes they are both peoples of the levant. They do indeed need to share.

Barry Stokes
BS
Barry Stokes
4 months ago
Reply to  UnHerd Reader

A pipe dream I fear.

Billy Bob
Billy Bob
4 months ago
Reply to  Samuel Ross

Aren’t most Jews in Israel of European, American or Russian descent? So apart from a religion have almost nothing to link them to some tribes who lived there thousands of years ago.
My surname is Saxon (according to Google anyway) so does that mean I can go and carve off a slice of Germany for myself, as an ancestor somewhere along the line would likely have lived there? Should a Brit with a Norman surname give up his garden to one with a Celtic surname seeing as his lot were likely there first?

Samuel Ross
SR
Samuel Ross
4 months ago
Reply to  Billy Bob

Shared common ancestors doesn’t necessarily mean that one people derives from the other. The Jews and Europeans may have forefathers in common, not that Jews are European.

Billy Bob
Billy Bob
4 months ago
Reply to  Samuel Ross

Jews aren’t European? A religion isn’t a nationality you do realise?

Andrew Dallal
Andrew Dallal
4 months ago
Reply to  Billy Bob

Actually the majority of Israeli Jews are Mizrahi, ie from the Middle East and North Africa. There were a number of waves of immigration to Israel in the 20th century often driven by persecution. My own parents fled Iraq in the 70s but came to London, although there is a very large Iraqi Jewish population in Israel.

Nick Faulks
Nick Faulks
4 months ago

“Indeed, several commentators have argued that seizing control of the gas field is the real reason behind Israel’s war in Gaza”.
Nothing at all to do with anything that may have happened on October 7th, then.

Warren Trees
WT
Warren Trees
4 months ago

Correction needed:
“There is an opportunity here to develop the gas fields in offshore Gaza, on behalf of the Palestinians, Hamas terrorists…”

Steven Carr
Steven Carr
4 months ago

Obviously, if we start burning more fossil fuel, the world will end.
That gas field must not be developed.

Brendan O'Leary
BO
Brendan O'Leary
4 months ago
Reply to  Steven Carr

Indeed, let us all join Israel in helping Gaza reach their net zero target.

Last edited 4 months ago by nadnadnerb
mike otter
mike otter
4 months ago

Sounds good – net zero survivors like cologne and dresden

Last edited 4 months ago by mike otter
Rupert Steel
RS
Rupert Steel
4 months ago
Reply to  mike otter

Or Coventry?

Jeremy Bray
JB
Jeremy Bray
4 months ago
Reply to  Steven Carr

Puts “Stop oil” supporters of Palestine in a bit of a quandary.

Charles Stanhope
CS
Charles Stanhope
4 months ago
Reply to  Jeremy Bray

All three of them.

Brendan O'Leary
Brendan O'Leary
4 months ago
Reply to  Jeremy Bray

They are glued to the road they have chosen.

Stephanie Surface
Stephanie Surface
4 months ago
Reply to  Jeremy Bray

Greta won’t be amused….
All those pro Hamas (sorry Palestine ) demonstrators are a strange bunch. Saw a film clip where a Muslim demonstrator took a multicoloured flag of “Gays for Palestine” and tried to hit the flag bearer with the pole. So now all the “Stop Oil” for Palestine won’t be amused either if Gaza turns out to become a new oil Eldorado for Palestine.

mike otter
mike otter
4 months ago

Come on fazi (rhymes with? anagrams in Italian?) what are the iranis/labour and their proxies going to do with a bit more oil or gas? – they already have billions of barrells and M3s and all the aid Biden and the UK give them for arms. Yet they still aim for the defenceless – children, wasters at festivals, the elderly and housewives. There are many things more full of gas than the Levantine Sea and this writer is one of them. Sounds like a load of fugazi to me.

Last edited 4 months ago by mike otter
Billy Bob
Billy Bob
4 months ago
Reply to  mike otter

Israel has killed many more civilians (especially children) than Hamas or the “Iranis”

Samuel Ross
SR
Samuel Ross
4 months ago
Reply to  Billy Bob

Based on the Hamas ‘Health Authority’?

Billy Bob
Billy Bob
4 months ago
Reply to  Samuel Ross

If they were massively inflated then Israel and the US would be releasing their own figures to counteract them. It’s not in their interest to have people believe the number of civilians killed is higher than it actually is

Dougie Undersub
DU
Dougie Undersub
4 months ago

The Gaza Strip is on top of a natural aquifer. If the inhabitants are short of water it’s because Hamas has been digging up water pipes funded by aid from the EU and using them to launch missiles.

Bret Larson
Bret Larson
4 months ago

Oil and gas projects in conflict zones don’t get developed a lot.

Brendan O'Leary
BO
Brendan O'Leary
4 months ago

The large Israeli gas fields are in deep water and the EEZ was agreed in separate negotiations with Cyprus, Egypt and Lebanon.

El Uro
EU
El Uro
4 months ago

“Indeed, several commentators have argued that seizing control of the gas field is the real reason behind Israel’s war in Gaza”.

Middle East Security and Nuclear Policy Specialist at Princeton University, recently wrote that “the ultimate objective is not only to demolish Hamas and/or exclude Palestinians from their homeland, but to confiscate Gaza’s multi-billion-dollar gas resources”

Dear Fazi, I’m not impressed enough by these arguments. The time has come to inform us that renowned experts from Harvard have received conclusive evidence, that all Hamas atrocities committed by them on October 7th. are deep fake. We already know that only one baby had his head cut off. The Thai only had half his head cut off, this does not count, but this is also a lie.
All this convinces us that Israel, a puppet of the United States, staged a monstrous staging with the hands of the Shin Bet and the CIA, only in order to destroy the brave fighters for the happiness of the Palestinian people.
I am really looking forward to such an article from you. The world must know the truth.

Last edited 4 months ago by El Uro
Samuel Ross
SR
Samuel Ross
4 months ago
Reply to  El Uro

Well said, sir. Also, the tunnels under Gaza are in fact an amusement park. Why Israel would be attacking an amusement park, I’m sure I don’t know. Also, Hamas is a social services organization of little old ladies sitting around knitting, drinking tea, and swapping pictures of their grandchildren. It’s all one huge misunderstanding, I’m sure. 😉

Nathan Ngumi
Nathan Ngumi
4 months ago

Very sad that the oil and gas fields of Gaza have been ‘stolen’ by Israel.