Cabinet approves gas sales from Gaza

The government approved Prime Minister Ehud Olmert's proposal to buy natural gas from the Palestinian Authority, Sunday, as part of a move to increase cooperation with foreign countries that pump natural gas from along Gaza's sea line.

The deal would provide tens of millions of dollars in revenue to the Palestinian Authority.

The decision was supported by 21 cabinet members. Three ministers – Avigdor Lieberman (Israeli Beiteinu), Ze'ev Boim (Kadima) and Yitzhak Aharonovich (Israel Beiteinu) –opposed.

The approval validates recent negotiations of the Israeli government with British Gas and its partner company CCC, which is controlled by the Palestinian Authority and Palestinian and Lebanese businessmen.

In 2003, then prime minister Ariel Sharon cancelled similar negotiations out of fear that natural gas revenues would end up in the hands of terrorists. Towards the end of his tenure, he appeared to change his stance and began discreet negotiations.

Six months ago, the government published a memo calling on private Israeli entrepreneurs to renew negotiations with British Gas.

Nonetheless, sources in the energy sector said "the government remembered British Gas too late, after using ridiculous excuses to avoid it for years. The British are merely speaking with the Israeli government out of politeness."

British Gas responded that they were pleased with the developments and expected to build contacts with the Israeli government.

Controversial secret partners

Businessman Yossi Meiman, whose energy company – Merhav – provides Israel with natural resources from Egypt via the joint EMG company, was angered by the government's decision.

"I am in favor of competition among suppliers of natural gas, but I don't understand the preference for British Gas over other suppliers," he told Ynet. "I offered to supply natural gas at a much cheaper price than British Gas, but was ignored.

"In the past, we negotiated on collaboration with British Gas but decided against it, after it turned out that they had secret partners, including Muhammad Rashid (Yassir Arafat's accountant) and Martin Schlaf," he added.

"This is why we decided not to go through with the deal," Meiman explained. "It was clear even then that a significant percentage of funds would go to the secret partners.

"Even if the Israeli government succeeds in overcoming Hamas' resistance to supervision of their use of direct natural gas revenues, who will supervise the funds that get to Hamas indirectly, via the secret partners?" Meiman asked.

British Gas denied Meiman's claims regarding the secret partners, saying that Rashid was never a direct or indirect business partner in the company.

Ronny Sofer contributed to the report