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Palestine eyes $1B West Bank oil reserves

OCCUPIED JERUSALEM: The Palestinian Authority announced plans Tuesday to explore for oil in the West Bank, adding a new element of uncertainty and confusion into troubled U.S.-backed peace efforts.

The Palestinians described the project, which would take place close to a small oil field in Israel, as a key step toward developing the local economy and gaining independence in the West Bank. But Israel, which wields overall control of the area, gave no indication that it has agreed to the plan, and far less ambitious attempts at economic development have repeatedly foundered in large part because of Israeli restrictions.

Mohammad Mustafa, the Palestinian deputy prime minister for economic affairs, said the Palestinians were seeking proposals from international firms to explore and develop oil in the northern West Bank.

He said the project was among a series of initiatives drawn up by Middle East Envoy Tony Blair to help develop the Palestinian economy. “The Palestinian people have the right to use their resources,” he told AP.

Blair has proposed a multiyear plan for developing the Palestinian economy, an effort that is intended to complement and bolster U.S.-led peace talks. But the former British prime minister has made little headway in carrying out the projects, which focus on eight areas of the economy, including agriculture, construction, tourism and energy.

Progress has been hindered because many of the projects are planned to take place in the 60 percent of the West Bank that was left under full Israeli control under interim peace deals two decades ago. The Palestinians say they cannot establish a viable state without being allowed to develop this area and say Israel routinely stifles attempts to do so.

According to a map released by the Palestinians, the exploration area covers more than 400 square kilometers in a strip of land along the frontier with Israel. Most, if not all, of this land, remains under full Israeli control.

In a statement, Blair’s office confirmed that energy was among the eight sectors targeted in his initiative. “Reliable energy supply is critical for the expansion and development of all sectors of the Palestinian economy,” it said. The statement made no reference to the project announced Tuesday and gave no details on where any West Bank oil projects might take place.

Israeli Prime Minister Benjamin Netanyahu’s office had no comment, and Israel’s Energy Ministry said it was not involved in the plan.

The Palestinian announcement could open up a new area of protracted negotiations with Israel. International bodies, including the World Bank, have urged Israel to lift restrictions on Palestinian development in Israeli-controlled areas of the West Bank.

In his announcement, Mustafa, a U.S.-educated economist and former official at the World Bank, said initial studies have indicated that the proposed exploration area may hold oil reserves of 30-186 million barrels. While not large in global terms, he said the project could generate proceeds of roughly $1 billion for the Palestinian government, including taxes and royalties. The government will accept bids from potential partners through June.

“The existence of oil in Palestine is a highly promising opportunity for the Palestinian economy,” he said.

In contrast to their energy-rich neighbors, Israel and Palestine have historically had few natural resources to exploit. In recent years, however, Israel has developed natural gas fields off its Mediterranean coast, and has begun pumping oil from a small field near the boundary with the West Bank, close to the area the Palestinians hope to tap.

Giora Eiland, acting chief executive of Israeli oil firm Givot Olam, declined to comment on the Palestinian plan, but said his company “absolutely” did not take any oil from the Palestinian side.

“We only have vertical drills, and all of them are located on the Israeli side,” he said.

 
A version of this article appeared in the print edition of The Daily Star on March 20, 2014, on page 5.

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Summary

The Palestinians described the project, which would take place close to a small oil field in Israel, as a key step toward developing the local economy and gaining independence in the West Bank.

Mohammad Mustafa, the Palestinian deputy prime minister for economic affairs, said the Palestinians were seeking proposals from international firms to explore and develop oil in the northern West Bank.

The Palestinian announcement could open up a new area of protracted negotiations with Israel. International bodies, including the World Bank, have urged Israel to lift restrictions on Palestinian development in Israeli-controlled areas of the West Bank.

Giora Eiland, acting chief executive of Israeli oil firm Givot Olam, declined to comment on the Palestinian plan, but said his company "absolutely" did not take any oil from the Palestinian side.


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