Gaza option pushed for Israel gas network

12 July 2002

The UK's BG Groupis discussing with state-owned Israel Electric Corporation (IEC)and other Israeli companies the supply of natural gas from its Palestinian Authority-controlled offshore Gaza concession to clients in Israel. The company is also considering joining an Israeli consortium to build a pipeline system for the distribution of the gas throughout the country (MEED 11:1:02).

BG on 9 July confirmed that it is holding talks with a group of Israeli companies, comprising Africa Israel Investments, Beitmannand Paz Oil Company, about setting up the $400 million pipeline system. The consortium submitted the sole bid for the contract to build the network earlier this year, but is looking for a new foreign partner following the withdrawal of Belgium's Tractebel.

Industry sources say IEC hopes to award the contract by the end of July, but BG has declined to confirm that a timeframe has been set for concluding the negotiations.

'We are discussing the possible participation in the consortium but are not committed to a timeframe, ' says a BG spokesperson. 'However, an agreement may be reached in due course.'

BG's involvement in the gas grid may boost the company's chances to reach a deal with IEC for the sale of gas from its offshore Gaza concession to Israeli clients. However, the company says that the negotiations are not linked. 'Discussions on both issues are progressing in parallel,' the spokesperson says.

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