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Half A Million Bpd At Risk From Geopolitical Firestorm

Half A Million Bpd At Risk From Geopolitical Firestorm

Geopolitical tensions are once again…

Oil Prices Rise Amid Falling U.S. Rig Count

Oil Prices Rise Amid Falling U.S. Rig Count

Oil prices inched higher on…

Hamas Strike Electricity Deal with Egypt

On 23 February the Palestinian resistance movement Hamas, which controls the Gaza Strip, announced that Hamas Gazan leader Ismail Haneya had reached a "comprehensive agreement" with Egypt to permanently end Gaza's ongoing electricity crisis. The agreement come in the wake of a visit Haniyeh made to Egypt, which began on 20 February.

Hamas spokesman Taher al Nunu said in a statement released to the media, "A comprehensive agreement has been reached with Egyptian officials to put a permanent end to the electricity crisis in the Gaza Strip. The (fuel) prices will be international prices and the fuel will be transferred in a way Egypt deems appropriate," adding that the agreement came after "intensive" efforts by Haneya in his discussions with Egyptian officials and the Islamic Development Bank.

Al Nunu added that the second, longer term section of the agreement provides for the Islamic Development Bank to underwrite upgrading and increasing the electrical capacity of Gaza's sole power plant by 40 megawatts. The Islamic Development Bank, founded by members of the Organization of Islamic Cooperation, will contribute $32.5 million to upgrading the Gaza Strip’s electrical power generating capabilities. The third phase of the project will see Gaza's electricity grid connected to Egypt's and will seek to convert its power plant, which currently supplies around a third of the Gaza Strip's electricity, from diesel to natural gas.

Following the initial imposition in 2006 by Israel of a blockade on the Gaza Strip, conditions were intensified in June 2007 after Hamas won an electoral victory there, besting its political rivals, the Palestinian Authority in elections that international observers judged to be free and fair.

Despite Gaza’s power plant being capable of generating up to 140 megawatts of electricity, the Israeli blockade has seen it starved for fuel, usually operating at less than half of its operational capacity and ran out of fuel two weeks ago because of the Israeli blockade. The U.S. State Department notes, “The Israel Defense Forces (IDF) strictly controls the crossing points between Israel and the Gaza Strip.”

On 23 February the International Committee of the Red Cross said it had delivered 150,000 liters of diesel to Gaza's health ministry, saying in a press release, "The fuel will help 13 public hospitals maintain essential health services for the next 10 days," adding that hospitals in the territory were now relying on generators for up to 18 hours a day.

In the interim, starting next week, according to Electricity Minister Hassan Younis, Egypt will begin to provide the Gaza Strip with 22 megawatts of electricity as of next week instead of its usual 17 megawatts to help alleviate the territory’s current energy crisis. Gaza's power station, together with electricity purchased from Israel and Egypt, can only currently supply 62 percent of Gaza's electricity needs. Engineer Ahmad Abu-al-Amrayn, head of the Palestinian Energy Authority's, PEA, Information Center, stated that this "small increase" is only an initial step, adding that in the next few weeks, the increase will jump to around 60 megawatts.

According Haneya's political advisor Yousef Rizka, speaking to Xinhua, Gaza will have continuous electricity clock when the three-phase project is completed in mid-2014. Rizka added that in the second phase of the development project, electricity purchased from Egypt will increase by 40 megawatts and the fourth turbine in Gaza's power plant will be repaired.

But Israel regards Hamas as a terrorist organization, which renders its future relations with the Jewish state problematic. Commenting on last month’s visit by Hamas spokesman Mushir al Masri to Switzerland’s Parliament, Israeli charge d'affaires Shalom Cohen said, "We were not happy with this development. We shared our view with the local authorities. It was a big mistake to invite a member of Hamas, which calls for destruction of Israel. It is counterproductive and gave them legitimacy to continue their terrorist activities, to continue to work on their basic ideology: the destruction of Israel." While the European Union recognizes Hamas as a terrorist group, the Swiss government is not a member of the EU and largely ignores EU sanctions.

Both Hamas and the Palestinian Authority are pursuing reconciliation talks. Whatever their outcome, it would seem that the Arab Spring is blowing Egyptian electricity to Gaza’s beleaguered populations, and surely even  the most bitter ideological enemies on either side of the Palestinian-Israeli dispute can agree that continuous electrical supplies for hospitals is a good thing.

By. John C.K. Daly of Oilprice.com



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