Israel reviews gas 'exports' to Palestine
The Israeli Ministry of Finance has found itself "in a quandary," grappling in recent days with the question of whether the gas export agreement signed between Leviathan Gas Partners and the Palestinian Authority is an agreement for the export of gas, the Israeli daily Calcalist learned. The issue arose nine months after the government had made a decision on gas exports [to the Palestinian Authority], and four months after the panel set up to discuss the gas taxation concluded its work.
In early January, Leviathan Gas Partners signed the first-ever agreement on the export of gas from Israel to the Palestinian Authority, on the scale of some 4 billion to 4.7 billion cubic meters [141 billion to 166 cubic feet], to be implemented over a period of 20 years — a deal which is expected to total $1.2 billion. Gideon Tadmor, who serves as chairman of Delek Drilling and CEO of Avner Oil — two companies that jointly own about 45.34% of the Leviathan offshore natural gas field — was cited as saying following the signing of the agreement that “it is a double-fold historic event: the first agreement ever on gas supply from the Leviathan gas field, which is the largest natural gas field of Israel, and the first-ever agreement on the export of natural gas [from Israel] to a company in the Palestinian Authority.”
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Anyway, the issue that has recently come into focus is both political [diplomatic] and economic. In fact, in the Ministry of Finance, they are currently trying to figure out whether the sale of gas to the Palestinian Authority should be considered an export transaction. And the reason for the dilemma is that the Palestinian Authority is not defined as a state. It is thus not clear whether the sale of gas beyond the Green Line should be deemed an export transaction. In case the answer is positive, it would be an export transaction with an entity that Israel refuses to recognize as a state as long as a peace agreement has not been signed. Hence, it is evidently a diplomatic issue. On the other hand, if it is assumed that the entity under discussion is not a foreign state, then the sale of gas to the Palestinian Authority cannot be considered a gas export transaction. In this case, any quota of gas supplied to the West Bank would actually be offset from the quota set aside for the Israeli market, and hence, the economic problem.
http://www.al-monitor.com/pulse/business/2014/02/israel-gas-export-palestinian-authority-leviathan.html#
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