* Palestinians to buy Israeli natural gas in 20-year deal
* Governments have yet to endorse agreement publicly
* Despite scepticism, energy companies say deal is win-win
By Noah Browning
RAMALLAH, West Bank, Jan 31 A billion-dollar
deal signed this month involving an Israeli natural gas field
and a Palestinian power firm marked a rare private-sector
victory over political conflict, but it may need top-level
support to succeed.
Palestinian officials say implementation will depend on
guarantees by the governments of both sides, whose mutual
distrust has grown amid troubled U.S.-backed peace talks.
The deal's Palestinian backers say Israel has pledged that
any future political or security crisis will not interrupt the
gas supply. No such assurance has been made publicly, however.
"There was a kind of guarantee from top levels in Israel ...
that there would be a continuous flow of gas no matter what
happens on the political front," said Samir Huleileh, CEO of the
Palestine Development and Investment Inc holding
PADICO holds an 18 percent stake in the Palestine Power
Generation Company (PPGC) at the centre of the deal, which
Huleileh said had received the guarantee from Israeli Prime
Minister Benjamin Netanyahu's office less than a year ago.
Netanyahu's office did not respond to a request for comment.
Under the agreement, PPGC is to buy $1.2 billion of gas over
20 years from the U.S.-Israeli group developing the huge
offshore Leviathan gas field.
At a signing ceremony on Jan. 5, Israeli billionaire Yitzhak
Tshuva, whose Delek Group is a major stakeholder in
Leviathan, hailed the deal as historic and said it would bolster
peace efforts. Delek officials, however, declined to speak to
Reuters on any Israeli political backing for the deal.
Palestinian Deputy Prime Minister Mohammed Mustafa said his
government looks favourably on the agreement, but that final
approval would come only after it had seen the text of the
contract and studied Israel's political commitments.
The Palestinian Authority exercises limited rule in the
occupied West Bank, captured by Israel in 1967 along with the
Gaza Strip and East Jerusalem. The Palestinians want that land
for a future state.
Palestinians in the West Bank now buy electricity from
Israel. If the PPGC were to get Palestinian government approval
for the gas deal and complete a planned $300 million power plant
in the northern West Bank, it would give Palestinians greater
control over their electricity supply.
Some Palestinians oppose the deal, saying deeper economic
ties with Israel runs counter to the quest for independence.
"To assume that Israel will honour this agreement and will
continue to deliver the gas for a whole generation is quite an
assumption," said independent economic analyst Nasser Abdul
"We have to free our country and people first, not make
deals between an occupier and the occupied. We need to be less
dependent on Israel, look east, diversify our partners and
investors, especially among the Arabs, not stay hostage to
Israel," he said.
But according to Walid Salman, PPGC's chief executive, the
Leviathan deal makes the most economic sense.
"Commercially, the agreement is a win-win. What's in the
mind of the Palestinian Authority and Israel is not my field,"
he told Reuters, referring to possible political complications.
"Palestine and Israel are neighbours - if you're going to
get fuel, it's best is to get it from your neighbour not from
Salman, who is also a regional manager for Palestinian
Consolidated Contractors Company (CCC), said progress was being
made in negotiations with exploration companies for the
development of an offshore Gaza gas field found in 1998.
Gas from the field could generate net profit of $150 million
a year from sales at home and abroad, Palestinian Prime Minister
Rami Hamdallah said late last year.
Officials have said a preliminary agreement between CCC and
British Gas could lead to the start of production in 2017.
(Additional reporting by Ali Sawafta, editing by Ari
Rabinovitch and Alistair Lyon)