Negotiators hope to solve Gaza energy crisis by the end of 2022 | Business| Economy and finance news from a German perspective | DW

Amid the current electricity crisis in the Gaza Strip, negotiations between the Israeli government, the Palestinian Authority and international partners could pave the way for increased energy security in the Palestinian territories within two years.

Zafer Melhem, chairman of the Palestinian Energy Authority, says Gaza has been suffering from a continuous shortage of energy supplies since 2006, mostly due to the closure and siege of Gaza. “Energy supplies from Egypt are interrupted; Gaza needs around 560 megawatts (MW), and currently only around 200 MW are available,” he told DW.

Melhem, who is also energy minister of the Palestinian Authority, explains that around 60% of Gaza’s electricity comes from Israel, the rest from the local diesel-fueled power plant.

A Palestinian woman walks past the Nuseirat power plant in the Gaza Strip

The Gaza Strip’s only functioning power plant in Nuseirat gets repeatedly hit by fuel shortages

The ongoing energy shortage impacts hygienic standards, which, especially during the coronavirus pandemic, exacerbates the humanitarian crisis. Gaza needs energy to pump and desalinize water. Its sewage system also depends on energy-intensive cleaning procedures.

“The first project to secure energy supplies to Gaza is to increase electricity supply from Israel, as this is the most reliable option at the moment. This would imply the construction of a high-voltage line, replacing the existing medium-voltage lines. It would reduce tariffs. We discussed the project with the Israelis for a long time, but they keep postponing it,” Melhem said.

The energy minister adds that the power plant’s conversion from heavy fuels to natural gas, the restoration of power lines with Egypt and investments in higher renewable energy capacity are some of the other energy priorities under discussion.

Read more: Israel’s regional gas exports lead to hopes for diplomacy

Concerning gas, the Ramallah-based Palestinian Authority, which pays Israel and Egypt for energy imports to the Gaza Strip, is committed to developing Gaza Marine. The gas field was discovered by UK-based BG in 2000.

Gaza Marine field

“From a purely technical point of view, the Gaza Marine field is extremely straightforward, it doesn’t present challenges at all. Even two decades ago when it was discovered it was well within the parameters of technology,” Michael Barron, a former BG official, who worked on the project from 2007 to 2014, told DW. “If this field were anywhere else in the world, it probably would have been developed by now.”

Experts agree that the Israeli government, the Palestinian Authority and Hamas have the power to veto the project. According to Barron, an agreement that would allow companies to step in will be possible “only after a permanent solution to the Israeli-Palestinian conflict.”

The opposition to Gaza Marine has raised eyebrows also in Israel. Some experts have advocated the development of the field. Some like Gabriel Mitchell, director of the Israeli Institute for Regional Foreign Policies, keep asking whether the Israeli objection is coherent with other government policies.

“Israel has been negotiating maritime border delineation with Lebanon. If it was OK for an Israeli perspective to negotiate an agreement with Hezbollah, why a difference with Hamas? I would be interested in hearing an answer from Israeli officials about it,” Mitchell told DW.

Mitchell says that the lack of infrastructure makes the Gaza Marine field financially tricky. “A lot of investment should be made in order to make the gas viable.”

In 2018, the London and Tel Aviv-listed oil and gas company Energean voiced its intention to buy a stake in the field.

Gas for Gaza project (G4G)

From a political perspective, the Gas for Gaza project (G4G) seems less polarizing, The pipeline, costing an estimated $100 million (€82.4 million), could transfer up to 1 billion cubic meters (35 billion cubic feet) of gas from Israel’s Negev Desert to Gaza every year, allowing the construction and operation of local power plants that would be able to cover nearly all electricity needs.

The G4G plan envisages using the infrastructure to ship gas from Gaza Marine once developed. It could substitute other energy imports from Israel and facilitate the shift from heavy fuels to natural gas, cutting Gaza’s CO2 emissions by 5%. However, plans for the pipeline have been repeatedly hindered by cross-border violence and political considerations on both sides.

“G4G is the key game changer in terms of a major energy infrastructure project going on at the moment in Gaza,” Ariel Ezrahi, director of energy at the Office of the Quartet, told DW. “This is going ahead, and it is going to happen. It will change the lives of the Gazans fundamentally.”

The Office of the Quartet, an international organization established by the United Nations, the European Union, the United States and Russia, kick-started the pipeline project in 2014. The G4G received the initial endorsement of both the Israeli and Palestinian governments, with significant support early on from the Netherlands, and more recently from Qatar and the EU.

“We are welcoming any initiative to accelerate and construct this project,” the Plalestian Authority’s energy minister told DW.

Senior people close to the talks confirm Qatar’s resolve to finance the project. “Negotiations are happening as we speak,” a source who didn’t want to be named told DW. The EU is also likely to contribute. According to the Office of the Quartet, the parties are now working to resolve the issue in the fourth quarter of 2022.

EMGF role critical

The Palestinian Authority and the Israeli government are part of the Egypt-based East Mediterranean Gas Forum (EMGF), an energy-focused organization including Greece, Cyprus and Italy. According to experts, there is significant room for cooperation between Israelis and the Palestinians in the forum, as both will sit at the same table.

Amit Mor, CEO of Podgorica, a Montenegro-based consulting agency, says the EMGF is important for the collaboration between governments, especially when it comes to discussing natural gas development issues in the Eastern Mediterranean region, also known as East Med. “The EMGF can expand its activity later on to discuss coordination in other energy-related fields like power, interconnection and trade in the region,” he told DW.

He and other energy experts see the Biden administration in the United States as a more active interlocutor increasing the probabilities of stable energy supplies to the Palestinian territories, the 17-square mile-area including the West Bank, east Jerusalem and the Gaza Strip.

Nonetheless, major infrastructure initiatives will remain difficult without peaceful relations between the Palestinians and the Israelis. Therefore, the projects most likely to secure Gaza energy needs in the short term are the ones with a strong business rationale, a central role of the private sector and key international support.

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