Paz to supply fuel to Palestinians until end of 2012

Major energy corporation renews contract following rumors PA considered termination. To date Paz earned $1.29 billion from exclusive deal

Reuters | Published: 01.02.11, 09:12

Israeli energy company Paz and its owner Zadik Bino renewed their contract with the Palestinian Authority for two more years. The contract was signed on Thursday and will end on December 31, 2012, with every side having the right to cease all connection after giving a 90-day notice.

The original contract was signed on September 2006 and came into effect in January 2007 for three years.

Lately rumors have spread that the PA was considering terminating the contract. This move could have badly hurt the major oil company's income, which has earned nearly NIS 4.6 billion ($1.29 billion) from its exclusive oil sales to the PA since the initial contact came into effect. Paz officials have said that this contract constitutes 10% of their revenues, earning them about NIS 1.3 billion ($370 million) in 2009.

Paz's revenues in 2009 reached NIS 12.69 billion ($3.57 billion). Paz has been exporting different fuels to the PA, including gasoline, diesel fuel and liquefied petroleum gas.

Paz officials said that the two sides agreed to a special payment plan, which will allow the energy company to collect its fee from tax funds which are designated for the PA and are held by Israel.