Oil, Peace and Palestine

World Energy Monthly Review Vol. 1 No. 4 July 2005
12
CEO Charles Davidson says Israel differs from the normalmarket: “Most of the time I’m worried about supply. In Israel,the market is the challenge.” But, he adds, “the infrastructureis coming together.”Indeed, over the next decade or so, Israel will have abooming pipeline construction business as the country extendsgas lines to industrial and electric power plants around thecountry. This gas will help Israel reduce the amount of pollu-tion coming from its power plants. It will also help its balanceof trade by reducing the amount of oil and coal it imports. Butwhile the new gas supplies will provide big benefits to Israel’senvironment and economy, those benefits are unlikely to reachthe Palestinians.

Israel and Palestine are dry lands. The Jordan River, a key supplier of fresh water, is being tapped by Syria, Jordan andIsrael for drinking water. And those countries are leaving no water in the river itself. The Dead Sea, which used to be fed by the Jordan, is shrinking by three feet or more per year.Both Israel and Palestine depend largely on aquifers for thei r drinking-water supplies. Those resources are also diminishing.The only option for the region is large-scale desalination, aprocess requiring huge amounts of energy. According to IshaiMenuchin, a researcher for Oxfam who works in Jerusalem, in Israel “the issues of water and energy go hand in hand.”The desalination question is particularly critical for the Palestinians who live in the Gaza Strip. The territory, whichlies on the Mediterranean Coast, has been fought over fordecades and desperately needs more potable water. Providingthat water was one of the original goals of the only electric powerplant located on Palestinian land – the Palestinian ElectricCorporation’s Gaza City plant. Rated at 140 megawatts (MW),the project was launched about six years ago in a partnership that included the Palestinian Authority, a Greek firm called CCC and Enron Corp.


The project was jump-started by theClinton administration, which encouraged Enron to get involvedand also assured that some of the funding for the project came from the federally backed Overseas Private InvestmentCorporation, an export credit agency. The project was derailedfor many months due to the collapse of Enron and the violenceof the second Intifada. Finally, in March 2004 the plant, whichcost $100 million to build, began operating commercially.A former Enron official who helped develop the Gaza powerplant says that one of the original aims of the plant was toconnect it to a desalination facility that could then providewater to Gaza. Furthermore, says the former Enroner, a keypremise of the power plants was to "make it gas friendly."Indeed, while the project terms were being negotiated, theGaza Marine-1 well hit gas. But today, nearly six years later,the Palestinians still cannot bring that gas ashore to fuel thepower plant or to provide energy for a water desalination plant.While Gaza remains stuck, the Israelis will soon beginoperating one of the world’s largest desalination plants. Theplant, located in Ashkelon, will have a capacity of 100 millioncubic meters (26.4 billion gallons) per year. The project, ajoint venture between French water giant Vivendi and Israeliinterests, includes a gas-fired power plant with 80 MW of capacity

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