Natural gas in the Gaza Strip

Natural gas reserves were discovered about 20 miles (35 km) offshore the Gaza Strip in 2000. The reserves, located within the maritime boundaries allocated to the Palestinian Authority (PA) under the bilateral Oslo Accords between Israeli and Palestinian leaders, were a key discovery for the still nascent Palestinian governing body, which was eager to establish a viable and independent economy. Although the Gaza Marine natural gas field, with an estimated 1.1 trillion cubic feet (32 billion cubic meters) of natural gas, is modest compared with some regional giants, the reserve far exceeds the energy needs of both the Gaza Strip and the West Bank. Its development, which the PA originally licensed to BG Group and CCC Group, offered the PA a path to self-sufficiency in energy and greater economic development through exports. After Royal Dutch Shell PLC purchased BG Group in 2016, the Palestine Investment Fund (PIF), the PA’s sovereign wealth fund, acquired its interest.

The Gaza Marine field remains unexploited because of the difficulty attracting the investment to develop it. The primary limiting factor is the size of the PA’s domestic market: Its energy consumption is too small to offset the cost of developing the field, which is estimated to be at least $800 million and could potentially be much more. Since the Oslo peace process was intended to bring peace and cooperation between the Israelis and the Palestinians, it was initially assumed that Israel would buy natural gas from the PA and add significantly to its return on investment. But the discovery of the natural gas reserves in 2000 coincided with the outbreak of the second intifada (2000–05). The hostility between Israel and the PA derailed the Oslo peace process, and discussions for a contract for natural gas did not get far. In 2007 the PA lost control over the Gaza Strip to Hamas, a militant group known for acts of terrorism against Israel, and the Gaza Strip and its waters were subjected to international sanctions and a blockade by Israel and Egypt. Israel later made much larger discoveries of natural gas off its own coast, significantly reducing its interest in buying natural gas extracted from the Gaza Marine.

In 2021 CCC Group and the PIF signed a memorandum of understanding with the Egyptian Natural Gas Holding Company that would allow the natural gas to be exported to Egypt. Hamas lent quiet support when a deal was concluded the following year without the group’s involvement. Israel, which exerted security control over the maritime boundaries as part of its blockade, agreed in July 2023 to coordinate with the PA and Egypt to allow the project to proceed. Months later, the Israel-Hamas War broke out after Hamas launched the October 7 attacks on Israel. The full siege and bombardment of the Gaza Strip prevented development work from taking place and left the future of natural gas in the Gaza Strip in limbo.