Israel's Tamar gas field. (Moshe Shai/Flash90) Israel's offshore gas field. (Moshe Shai/Flash90)
Israel gas rig

The Palestinian Authority canceled a lucrative deal with Israel, thwarting an opportunity to end energy dependence on the Jewish state. 

The Palestinians canceled a deal to purchase natural gas from Israel’s “Leviathan” gas field on Wednesday. The gas was designated for the use of the Palestine Power Generation Company (PPGC) and the new Palestinian electrical plant in Jenin.

The agreement, which was estimated at $1.2 billion over the course of 20 years, was significant because of the geopolitical ramifications of such a deal with the Palestinian Authority (PA). However, in comparison with the large deals signed with Egypt (two deals totaling at $50B) and Jordan ($20B), the financial loss is negligible.

Israel was also hoping to advance the Palestinian power project and to eventually disconnect them from the Israeli grid, a connection which has generated financial and technical difficulties for Israel’s Electrical Company (IEC).

At the time, the contract was the first gas export from Israel, with the added advantage of a short pipeline through Israel’s Sharon Valley to the PA.

Shareholders released a statement to the Israeli stock market tying the collapse of the deal with Israeli government regulators who instated new guidelines in an attempt to break the monopoly on gas sales.

According to the Leviathan partners, the reason the deal fell through was “non-fulfillment of the prerequisite conditions set forth in the agreement, essentially the denial of an Antitrust Authority approval, delay in approving development of the Leviathan project, and a failure to receive the regulatory approvals required by law.”

The cancellation of the contract with the PA is not expected to affect the deals with Egypt and Jordan.

By: Aryeh Savir
Staff Writer, United with Israel 

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