Israel needs to see the Palestinians — including the Gazans — as an asset as they strive to join the regional power grid, the Quartet’s energy adviser tells Haaretz.
By Avi Bar-Eli | Nov. 21, 2014

Ariel Ezrahi, the energy adviser to Quartet representative Tony Blair, is no politician, but he can’t help but provide some of the Quartet’s political thinking on Israel’s recent natural gas export agreements with its neighbors.

“We asked the Egyptians about their [natural] gas contract with the partners in the Leviathan field, and they claimed that it was only a nonbinding agreement in principle. In their press release, the Jordanians also noted that alongside the agreement in principle with Leviathan, they intend to buy gas from the reservoir near Gaza — and that’s not by chance,” Ezrahi says.

“You have to put yourself in the shoes of the foreign governments and understand that it’s very hard for them to sign a gas contract with Israel despite their desperate need. They’re between a hammer and an anvil in light of the TV pictures of Jerusalem burning. If I were Israel’s prime minister, I’d think how I could help the neighboring countries extricate themselves from the jam, and if Israel closes the Palestinian gas market, that’s not a smart thing.”

The Office of the Quartet Representative — which supports Tony Blair in his work as envoy for the contact group of the United Nations, European Union, United States and Russia — sees numerous opportunities for cooperation and collaboration between Israel and the Palestinians in the regional gas arena. It believes that it would be in the interests of all parties concerned to consider how their respective gas deals could potentially benefit from the other gas deals (whether in terms of joint infrastructure, political support, etc.) thus ensuring success of these cross-border transactions.

The Quartet says its mandate is to “help mediate Middle East peace negotiations and to support Palestinian economic development and institution-building in preparation for eventual statehood.”

Ezrahi spoke with TheMarker just before this week’s Universal Oil & Gas conference at the Dead Sea.

“We have to understand that the neighboring countries are very interested in gas but are in a difficult political situation because it’s not very popular to sign on to such steps with Israel …. So it would be wise for Israel to at least consider the contribution of the Palestinian dimension to these deals,” he says.

Israel needs to promote its gas because it collects royalties and taxes on it. Why should we want to help sell Palestinian gas?

“The amount of Palestinian gas is 30 times smaller than Israel’s. Israel will not lose large royalties if the gas off the Gaza coast is sold to Egypt. Israel has a golden opportunity to exploit its neighbors’ need for Israeli gas — like its electricity.

“[Prime Minister Benjamin] Netanyahu himself has spoken to the media about Israel needing to connect with the moderate countries in the region, and there’s no doubt gas agreements can be a very important political means — we see this everywhere around the world. I think it’s a mistake for Israel to rush into regional agreements without at least considering the Palestinian dimension and how it can contribute to Israeli interests.”

The Turkish angle

So what should be done?

“For example, let the Palestinians sell the gas to various markets, or promote a barter deal with the owners of [offshore gas fields] Tamar and Leviathan that will allow for the sale of cheap gas to the [Palestinian] Authority …. Take for example the negotiations to export gas from Leviathan to Turkey. It will be much more comfortable for the Turks to sign with Israel with the knowledge that Israel is promoting Palestinian gas — and they’re already planning an industrial area in Jenin that can be supported by this gas. There are all sorts of creative ways to create a win-win situation.”

Ezrahi has been working in energy for 10 years, mostly at law firms in London, where he used his U.S. passport to work on oil and gas deals in the Persian Gulf — and to learn Arabic. He returned to Israel two years ago and has worked with natural gas customers in negotiations with the Tamar partnership. Now he heads the Quartet’s team of energy advisers — and tries to help develop the PA’s economy.

“We’re working like in Israel before the founding of the state,” he says. “Returning to fundamentals. Thinking what to build, which power stations are needed and whether to rely on desalination.”

There are a few main projects: the development of the Gaza Marine field, power plants in Gaza and Jenin, a new 161-kilovolt high-voltage line between the Israeli and Gazan power networks, and possible renewable-energy facilities in the northern West Bank.

Do you speak with the government in Gaza?

“I can’t meet with people linked to Hamas. It’s a very firm ban dictated by the Quartet. The Americans don’t enter Gaza either. But we have a Gazan adviser, and sometimes Quartet people meet there with representatives of international organizations or businesspeople”

Gaza’s shaky power situation

How then go the contacts regarding Gaza’s power station?

“The owner of the plant is the [Lebanese-owned] company CCC, whom I meet with in Amman or London, for example. Similarly I’ve had countless meetings with Palestinian Energy Minister Omar Kittaneh — who can enter Gaza.”

But the power plant is a target for attacks by Israel’s air force in almost every military operation in Gaza.

“That’s true. We bombed the diesel [fuel storage] tanks during Operation Protective Edge, but the plant returned to operation intermittently after a way was found to fuel it. These are creative solutions and it’s not clear how long they’ll hold. Last week, for example, there was an explosion at the Palestinian end of the pipeline for transferring diesel fuel at Kerem Shalom. A Gaza tanker driver was killed and diesel-fuel supplies were disrupted.

“Currently in Gaza there’s a shortage of about 200 megawatts, so 1.8 million residents sit 18 hours a day without electricity, except those who have a generator. The [power] station works in waves; for example, from 7 A.M. until 1 P.M. — then it’s halted until 1 A.M and turned back on at 7 A.M.”

How then does electricity reach Gaza?

“Israel provides 10 power lines through which the Israel Electric Corporation provides some 120 megawatts. Another 20 megawatts are supplied by Egypt. Today the power stations supply 50 to 60 megawatts out of a potential of 140 megawatts.”

What does CCC say about the bombing of the power plant?

They’re very worried. After all, they’re a business. But it’s not by chance they’re in Gaza — the owners have Palestinian roots.

CCC also owns 30% of the rights to the Gaza Marine field, along with BG’s 60% and the PA’s 10%. But the field’s development has been frozen since it was discovered in 2000; the Israeli government and military have feared that revenues from the gas, estimated at 32 billion cubic meters, could wind up with terror groups.

Still, in recent years Israeli security officials have changed their stance and would countenance a solution under international auspices. The IEC has even had contacts to buy gas from the field, though nothing came of it.

“The contacts are at the highest levels,” Ezrahi says. “This is one of the main projects that Blair sees as economic infrastructure for the Palestinians; I personally have heard him raise the matter with Prime Minister Benjamin Netanyahu.

Israel needs to see the Palestinians as an asset as they strive to join the regional power grid, and as a bridge to the Arab world, Ezrahi says.

“It can be something great if they do it wisely. It’s illogical, after all, to build a desalinization plant here and there, an airport here and there, and power plants here and there,” he says.

“I’m an energy person, not a politician, so I don’t talk about a vision for peace. I point out the enormous potential for regional cooperation in the energy sector.”