Palestinians cancel natural gas deal with Israel

$1.2 billion pullout is the latest in a series of setbacks for the Leviathan offshore field

Stuart Winer is a breaking news editor at The Times of Israel.

Gas rigs in the Tamar field, off the coast of Israel, in June 2014. (Moshe Shai/Flash90)
Gas rigs in the Tamar field, off the coast of Israel, in June 2014. (Moshe Shai/Flash90)

The Palestinians have withdrawn from a deal to buy natural gas from an Israeli offshore site amid concerns over development delays, the field’s operating companies reported on Wednesday.

Owners of the Leviathan field said that the Palestine Power Generation Company had canceled a $1.2 billion agreement, signed in 2014, to buy 4.75 billion cubic meters of gas over 20 years.

A key issue for the Palestinians was the failure of Leviathan’s owners to obtain approvals from the Israel Antitrust Authority for production, as well as other development holdups.

Last year an even larger Jordanian deal fell through after the Antitrust Authority decided to void an agreement that allowed Noble Energy and Israel’s Delek Group to develop the Leviathan and Tamar gas sites in the Mediterranean, on grounds that the arrangement constituted a cartel.

According to Reuters the PPGC wants to build a $300 million gas-fired power plant in the West Bank town of Jenin.

At the beginning of this month representatives from the Noble Energy team were in Egypt for talks on gas imports, according to Egyptian sources.

Leviathan, which boasts an estimated 16-18 trillion cubic feet of gas, was discovered in 2010 some 130 kilometers (81 miles) off the coast of Haifa. It was expected to become operational in 2016, but the Antitrust Authority’s decision pushed that back by several years.

Israel began pumping natural gas in March 2013 from the Tamar deposit — discovered in 2009 and located some 90 kilometers (56 miles) west of Haifa — which holds an estimated 8.5 trillion cubic feet of natural gas.

In early September, Israel signed a memorandum of understanding with Jordan to supply the Hashemite Kingdom with $15 billion worth of natural gas from its Leviathan energy field over 15 years. However, following the regulator’s announcement, Jordan was said to have called off talks until further notice.

Times of Israel staff contributed to this report.

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