The cabinet today abrogated a clause banning the state from purchasing or marketing natural gas from the Palestinian Authority, thereby removing the main obstacle to a contract with BG Group plc (NYSE: BRG; LSE: BG) (British Gas). 21 ministers voted in favor and three against.
Last month, the cabinet postponed a decision whether to sign a contract with British Gas, after Minister of Foreign Affairs Tzipi Livni, Minister of Defense Amir Peretz and Minister of Strategic Affairs Avigdor Lieberman demanded a review of the diplomatic and security ramifications a deal.
Negotiations between the government and British Gas are in an advanced stage. The government will buy natural gas directly from the company and sell it to private consumers under a 15-20 year contract worth $2 billion.
Minister of National Infrastructures Benjamin Ben-Eliezer said that today’s decision would diversify Israel’s sources of natural gas. The Ministries of Finance and National Infrastructures authorized a subcommittee to reach a detailed contract with British Gas.
Merhav MNF Ltd. chairman Joseph (Yossi) Maiman, a partner in East Mediterranean Gas Ltd. (EMG) lambasted the pending deal with British Gas. He said he could not understand the calculations behind such a contract, including giving preference to British Gas and the secrecy in which the negotiations were being conducted. He reiterated claims that Austrian billionaire Martin Schlaff and a former aide to Yasser Arafat, Mohammad Rashid, were hidden partners in British Gas. “Two months ago, the government negotiating team was offered a much lower price than what British Gas is offering, but we’ve had no response to the matter since then.”
Senior government officials said Israel could not rely on a single natural gas supplier EMG - which would then become a monopoly. They added British Gas would not begin deliveries before 2012, by which time a deal might also be reached with the Palestinian Authority.
EMG and Yitzhak Tshuva’s Delek Group Ltd. (TASE: DLEKG) subsidiary Yam Thetis LP are considering petitioned the High Court of Justice against the deal with British Gas and the Palestinian Authority.
Published by Globes [online], Israel business news - www.globes.co.il - on April 29, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007