Is it a natural gas war? Trillion dollar reserves await beneath Gaza's ashes

Each war or conflict around the world carries economic implications – benefits and gains to be more specific – even when those conflicts bear religious or national overtones. The ongoing war in Gaza is by no means an exception, and its economic intricacies are perhaps even more apparent than others.

Beneath the rubble of homes and infrastructure that have been razed to the ground in Gaza, and on its nearby shores, lie trillions of dollars' worth of gas reserves, waiting for those who can extract and transform them into a source of national wealth. The pivotal question is, who will this natural gas belong to?

To understand the relationship between the gas fields in Gaza and all the wars waged on the besieged strip, leading to the current war, we need to step back in time. In this report, Raseef22 tries to assemble the pieces of this intricate puzzle and place them within a clear chronological context so that the story of Gaza's natural gas becomes understandable.

Most importantly, we must delve into the progress and advancements that were on the verge of taking shape concerning Palestinian natural gas but were abruptly halted by the "Al-Aqsa Storm" operation and its aftermath.

Beneath the rubble of homes that have been razed to the ground in Gaza, and on its nearby shores, lie trillions of dollars' worth of gas reserves, waiting to be extracted and transformed into a source of national wealth.. Who will this natural gas belong to?

The relation between the Arab Spring and the current conflict

In 2009, Israel's discovery of the "Tamar" gas field in Mediterranean waters sparked a territorial dispute, particularly with Lebanon. Then, in 2010, Israel discovered the "Leviathan" gas field, which Egyptian studies assert is situated within Egypt's territorial waters, not Israel's. By 2011, the Arab Spring was in full swing.

The onset of the Egyptian revolution marked the commencement of recurring energy crises for both Israel and Jordan. These crises were a direct consequence of recurrent attacks on the gas pipeline that traversed Sinai and provided both nations with their gas supply. Starting from February of that year, the pipeline had been a target on more than 30 occasions. Each time, Egypt suspended gas flow, in a bid to avert further combustions and explosions, consequently resulting in prolonged power shortages and energy crises in the two countries.

During that period, Israel's energy landscape was significantly altered. Initially reliant on Egyptian gas for 16% of its electricity generation, Israel swiftly transitioned from importing energy to producing and exporting it, driven by national security concerns.

To understand the relation between Gaza's gas fields and all the wars waged on the besieged strip, we must step back in time. In this report, Raseef22 attempts to assemble the pieces of this puzzle in a clear chronological order to reveal the hidden reality

Various groups, often including "terrorist organizations", "Islamists", "ISIS", "extremists", and particularly "Hamas", were repetitively accused of being responsible for the acts of sabotage inflicted upon the gas pipeline. These events conveniently provided Israel with a strong pretext to explore alternative energy sources , even if this search was illegal, specifically, gas in the adjacent Mediterranean waters. However, this choice has brought about several legal dilemmas related to international law, the demarcation of regional and international territorial waters, and claims to gas fields that overlap with Lebanese waters on one side and the Gazan coast on the other.

Israel escalated its gas exploration endeavors within its own territorial waters and those of its neighboring nations, under the pretext of the continuous disruption of Egypt's gas supply, ignoring the legal issue regarding the ownership of these fields. The economic challenge, however, persisted because the costs of gas extraction were not covered by revenues alone. For any gas-producing nation, it is imperative to export at least 50% of its extracted gas to achieve a balanced budget. The Israeli government, in line with this, imposed export restrictions to ensure a sufficient domestic market supply in the future.

On the second day of operation "Al-Aqsa Storm," the Israeli Ministry of Energy announced that it was temporarily suspending operations in the Tamar gas field, and would explore alternative sources of natural gas. What are these alternative sources? And to whom will Israel export this gas?

Israel exports gas to Turkey

In 2011, Turkey launched an ambitious ten-year plan with aspirations of becoming the world's largest energy distributor. This entailed importing energy resources from the East and subsequently exporting them to the Western world. This plan included, in addition to alternative energy sources and nuclear power plants agreed upon with Russia, the establishment of three gas pipelines, all of which flow through Turkey. These pipelines are outlined as follows:

First: The Tanap project, a gas pipeline stretching from Azerbaijan to Turkey.

Secondly: The Qatari gas pipeline, originally intended to pass through Syrian territory and would have been able to compete with Russian gas in Europe. This ambitious project gained notoriety through Robert Kennedy's article published in February 2016, attributing Qatar's investments and Turkey's involvement in the Syrian war to this massive endeavor.

Thirdly: The Israeli-Turkish gas pipeline, an older proposal driven by shared interests between the two nations. Unfortunately, it did not come to fruition at the time, during the early stages of the Arab Spring due to the Cyprus-Turkey dispute, which thwarted the construction of an underwater pipeline to Turkey. This was primarily because Cyprus opposed the Israeli pipeline passing thtough its waters to reach Turkey.

On the 2nd day of operation "Al-Aqsa Storm", Israel announced that it was temporarily suspending operations in the Tamar gas field, and would explore alternative sources of natural gas. Where are these sources? And to who will Israel export this gas?

The Qatari-Turkish gas pipeline failed after it faced staunch opposition from Russia, which dedicated all its might to dismantle this project. In contrast, the Tanap project was inaugurated, and Azerbaijani gas began flowing to Turkey in 2018.

However, a significant twist of events occurred in September 2023, merely two weeks prior to operation "Al-Aqsa Storm". Turkish President Recep Tayyip Erdoğan and Israeli Prime Minister Benjamin Netanyahu announced a momentous economic breakthrough during their joint meeting in New York. They revealed that Israel would now export gas to Turkey, signifying that the maritime barrier had been effectively circumvented.

Erdoğan stated during the meeting, "Not only will we start operating energy pipelines to Turkey, but also from Turkey to Europe."

Israel ventures into gas exports to Europe

Of course, the most extensive negotiations that Israel engaged in were with the European Union, as it represents the largest consumer due to its industrial prowess and nature of the cold climate. However, the negotiations eventually failed in 2012. Regardless of whether gas was to be liquefied and transported using carriers or through the construction of pipelines in the Mediterranean, feasibility studies in both scenarios demonstrated that importing Russian gas was more economically viable, primarily due to lower transportation and importation costs.

At that time, no one knew that Russia would wage a war on Ukraine, causing a European energy crisis. This crisis prompted Europe to seek all possible alternatives from the other side of the Mediterranean.

After the explosion of the Egyptian pipeline that supplies gas to Israel in Sinai, the pace of Israeli gas exploration in the Mediterranean increased, despite legal disputes over regional and international waters.

Following years of unsuccessful negotiations between Europe and Israel due to the high costs of gas exports, a colossal project known as the "Eurasian Electric Cable" is on the horizon. This project will extend from Egypt and Israel, looping around the other side of the Cypriot island, through Greek waters, and ultimately reaching Italy. Israel will gain the capability to export gas to Europe, allowing it to compete with Russian gas, not only through Turkey, but also through Greece.

Israel's gas exports to Jordan

With the onset of the Arab Spring, it became increasingly evident that Jordan needed to diversify its energy sources as much as possible or seek alternative sources of energy. This necessity arose in the event of the Egyptian gas pipeline ceasing operation. In 2011, Jordan's electricity generation was heavily reliant on Egyptian gas, accounting for a substantial 80%.

Jordan has tried more than once to tap into its substantial oil shale reserves, estimated at a staggering 80 billion tons. This volume positions Jordan as the possessor of the world's fourth-largest oil shale reserves, capable of significantly bolstering the country's GDP to easily place it among Gulf nations.

In 2012, the Jordanian government signed multiple memoranda of understanding for oil shale exploration with Estonian and Canadian companies renowned for their expertise in this type of exploration. Jordan also made strides towards the extraction of gas from the Risha field. But these steps were halted midway through. This failure to secure energy alternatives was accompanied by the emergence of many conspiracy theories and questions about the reason for searching for external energy sources instead of investing in domestic resources.

Every time the Palestinians come close to extracting gas, a war would be waged on Gaza, consistently and without fail halting agreements with global exploration companies that would benefit the Palestinians. This pattern has quietly repeated itself for 20 years

In 2014, the Jordanian Electric Power Company sealed a substantial, long-term, 15-year deal with "Noble Energy". This arrangement stipulated an annual payment of one billion dollars to the latter in exchange for gas imports.

However, this agreement did not sit well with the "anti-normalization" groups. "Noble Energy", a multinational corporation, executed the deal on behalf of the Leviathan Field Companies consortium, of which Israeli companies own approximately 60% of the share, while the Jordanian Electric Power Company was entirely owned by the government.

Consequently, Jordan now finds itself relatively dependent on Israel for its energy needs, replacing Egyptian gas with Israeli gas.

The mastermind behind this energy deal between Jordan and Israel was none other than the former US Secretary of State, John Kerry. He was revealed to have financial interests in "Noble Energy", and own shares in the company, according to a report by the Times of Israel. Details of Kerry's ownership stake were disclosed based on his financial statements from the year 2013.

Israel's gas exports to Egypt

Egypt's role in the gas trade has undergone a significant transformation. It evolved from being a gas supplier to Israel to becoming an importer. This shift came about in 2019 when Cairo signed an agreement to import gas from Israel's Tamar and Leviathan fields. Notably, the Israeli Energy Minister referred to this agreement as the most substantial collaboration between the two nations since the signing of the peace treaty.

During the same year, "Noble Energy" in the United States, in partnership with the Israeli company "Delek," secured a contract with Egypt's "Dolphinus" company. This contract, valued at $15 million, mirrored the deal with Jordan. Its purpose was to supply Egypt with a substantial 64 billion cubic meters of natural gas. In 2020, Israeli gas began to flow into Egypt, marking Egypt's transformation from a gas exporter to an importer.

According to a report published by the Israeli Ministry of Energy and Infrastructure, Israeli gas revenues experienced an uptick of around 28.8% in 2022. This surge was attributed to an increase in natural gas exports to Egypt and Jordan, and partly due to the increase in exports to European Union countries that had faced a crisis due to the disruption of Russian gas supplies. This partially explains Israel's support for the Ukrainian front in the war.

Just two weeks before operation "Al-Aqsa Storm", Netanyahu and Erdoğan, convened in New York and unveiled their plan for Israel to commence gas exports to Turkey in the near future

Egypt's loss in this regard became Turkey's gain. In the early 2000s, Egypt and Israel engaged in negotiations, with Israel planning to export gas to Egypt for re-export. Furthermore, discussions took place with the Palestinian Authority during Yasser Arafat's presidency for Egypt to undertake the export ofPalestinian gas off the shores of Gaza. At that time, Egypt was one of the major global gas exporters, with pipelines extending from the Mediterranean to deep Africa. However, Egypt lost its status as the largest distributor to the Turkish player.

The Palestinian Authority and exploration rights

Under international law, the Palestinian Authority holds the exclusive legal authority to sign exploration contracts for gas in the West Bank and Gaza Strip. To try to understand the story of Gaza's gas and its relation to all the efforts to end the Palestinian division and wars on the besieged strip, one can trace the following sequence of events:

In the year 2000, Yasser Arafat presided over the official agreement between the Palestinian Authority and the British company "British Gas". The British Gas company would undertake the task of extracting gas and the responsibility of aiding the Palestinians in marketing and harnessing the gas. This marked the beginning of the Gaza Marine 1 field.

In 2001, with the election of Ariel Sharon's government, the Palestinian Authority's ownership of the gas fields was legally challenged before the Israeli Supreme Court.

In 2003, Israel rejected a proposal from the British Gas group to export gas to Israel. This rejection was based on the premise that such a purchase would signify Israel's recognition of the Palestinian Authority's ownership of the gas.

In 2006, side negotiations commenced between the Israeli government and the British Gas group with the aim of exporting gas to Israel while providing Palestinians with their share in the form of goods. Notably, the Palestinian Authority and Hamas were excluded from these negotiations, which ended in failure because the company rejected this formula, and British Gas closed its offices in Israel.

Dr. Ayman Halaseh, an expert in international law, clarifies that "Israel's exclusion of the Palestinian Authority as a party to the contractual agreements for gas exploration does not mean anything at the international level. These contracts are made with private companies, which do not care which party signs with they as much as they care about having the ability and authority to oversee the operations. These contracts are subject to private law, rather than international law, and they do not detract from the exclusive exploration rights of the Palestinian Authority."

In 2007, Hamas took control of the Gaza Strip, leading to legal ambiguities surrounding the ownership of oil fields, given that it was regarded as an illegitimate and unrecognized government. As Hamas sought to assert control over these fields, Israel grew apprehensive about the gas falling under Hamas's influence.

In 2008, Israel initiated an offensive against Gaza, which Professor Michael Chossudovsky, an expert in political economy at the University of Ottawa, attributes entirely to Israel's need for gas. And indeed, Israel seized control of the "Gaza Marine 1 field".

In 2011, specifically in February, Gaza fishermen observed bubbles emerging from the sea. Unsure of the origin, they reported this phenomenon to the Hamas government. In the same month, an announcement was made regarding the discovery of a gas field that had not yet been named or explored by the government in Gaza. The Gaza government then voiced complaints about its inability to engage petroleum exploration companies to assess the field's significance due to the blockade.

In just a decade, Egypt went from being a significant gas exporter to Israel to a net importer from Israel.

Also in that year, Palestinian President Mahmoud Abbas expressed his willingness to reconcile with Hamas and visit Gaza to sign an agreement aimed at ending the division. Israel contended that this reconciliation was designed to bring about Israel's end. Subsequently, negotiations were initiated between the Palestinian Authority and "British Gas". Later, former Palestinian Prime Minister Rami Hamdallah approved an international tender from the Palestinian Authority for oil exploration in Gaza, affirming that Palestine would begin exporting gas in 2017.

In 2013, particularly in November, the Palestinian Authority announced its close cooperation with the "British Gas" group to explore gas in Gaza.

In 2014, prior to moving forward to the next phase of contract implementation, three settlers were kidnapped in the West Bank, and Israel accused Hamas of orchestrating the abduction, along with inciting speech against the Palestinian Authority for accepting reconciliation with “kidnappers and terrorists". It then launched a military operation against Gaza known as operation "Protective Edge". Moshe Ya'alon, the then-Israeli Security Minister, stated that the military plans aimed to uproot Hamas and prevent it from controlling the gas resources in Gaza.

A persistent pattern of destruction and blocking access to gas

Every time the Palestinians come close to extracting gas, whether through reconciliation between the factions or the signing of agreements and memoranda of understanding with international exploration companies, an operation occurs that leads to a war on Gaza, consistently and without fail halting any energy agreements that would benefit the Palestinians. This pattern has 'quietly' repeated itself for over two decades.

What Gaza is experiencing today is no exception, occurring just three months after an agreement brokered by Egypt between the Palestinian Authority and Israel. In June 2023, Israel agreed to allow the Palestinian Authority to develop the "Gaza Marina" gas field, situated off the coast of Gaza. This agreement stipulated that the financial returns would be shared between the Palestinian Authority and Hamas, contributing to their revenue and energy independence.

International law expert Dr. Halaseh explains, "Israel consistently obstructs any attempts related to gas exploration and extraction for Palestinian gain. Whenever arrangements for exploration and extraction draw near the implementation phase, we witness conflicts, wars and incidents that hinder these endeavors. The most recent arrangement that was reached had been on the verge of finalization, and stipulated that Israel had given its approval, and Palestinian gas was slated for export to Egypt, which would then re-export it."

Who predicted today's scenario?

In May 2011, Professor Chossudovsky published an extensive study presenting his comprehensive theory regarding "Operation Cast Lead", conducted in 2008 and 2009 in Gaza, and its connection to Israel's ambition to control Gaza's maritime natural gas reserves. He refers to the ongoing negotiations between British Gas and Israel for the purchase of natural gas from offshore fields in Gaza.

The research draws the conclusion that "the invasion of Gaza was intrinsically tied to the desire to gain control over these maritime reserves and transfer their sovereignty to Israel, in violation of international law."

In 2011, Professor Michel Chossudovsky published research linking the war on Gaza with the prevention of Palestinians accessing the gas fields they owned. Remarkably, he foresaw the very scenario we observe today.

The research raises critical questions regarding the potential consequences and repercussions of this invasion on these gas reserves. This includes the possibility of establishing new regional arrangements or expanding militarization of Gaza's coastal region. In essence, the possibilities outlined in this research align closely with the unfolding scenario currently taking place.

Chossudovsky asserts, "According to estimates from the British company, the gas reserves in the two Gaza wells amount to approximately 1.4 trillion cubic feet, valued at around four billion dollars." Nevertheless, in his research, Chossudovsky also posits that these figures are likely much higher, potentially capable of making Palestine wealthier than Kuwait.

What if Palestinians gain access to their gas?

The extraction of Palestinian gas would, at the very least, reduce their reliance on external grants and aid. This move could emancipate the Palestinian economy in the West Bank and Gaza from the grip of the Israeli economy and dominance, fostering individual prosperity and self-sufficiency, all without incurring political implications.

The question remains: Why does Israel need to displace the northern part of Gaza to be able to extract gas? The simplest answer lies in the fact that if Israel were to revert to its status as an occupying state, rather than maintaining a blockade or siege, it would have legal "responsibility" to safeguard the wealth of the people it has occupied. As a result, Israel could claim legal authority over the gas fields in Gaza, both those already discovered and those yet to be found.