Sharon about faces on Gaza gas

Prime Minister Ariel Sharon and Minister of National Infrastructures Benjamin Ben-Eliezer last week reached an agreement with BG Group (NYSE:BRG; LSE:BG) (formerly British Gas) to become Israel’s third natural gas supplier.

The Prime Minister’s Office had previously vetoed every initiative to buy natural gas from BG Group, the franchise holder for fields offshore from the Palestinian Authority-controlled Gaza Strip. Sharon previously opposed buying natural gas from Gaza, because of concerns that Israel’s payments to the Palestinian Authority would finance terrorism.

“Globes” reported that the Prime Minister’s Office had announced two weeks ago that it would not rule out cooperation between Yam Thetis and BG Group for the supply of natural gas to Israel. Yam Thetis supplies gas to Israel from the Mary B field offshore from Ashkelon. It has been negotiating with BG Group to jointly supply natural gas from Palestinian fields.

Yam Thetis is seeking to increase its limited reserves. A second factor is the entry into the Israel natural gas market of another dominant player Eastern Mediterranean Gas (EMG) in 2007, which will supply gas from Egypt.

The Ministry of National Infrastructures is due to establish the terms for BG Group’s activity in Israel. Ministry of National Infrastructures director general Eli Ronen is expected to invite Palestinian and BG Group representatives to promote this plan.

Ben-Eliezer said, “The Israeli economy needs to ensure additional natural gas suppliers, who will guarantee quantities and attractive prices. Opening the way for another natural gas supplier will enable natural gas deliveries for a long time, while preserving the interest of the Israeli economy of available gas at an economic price.”

Published by Globes [online], Israel business news - www.globes.co.il - on September 26, 2005