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Too hot to handle? Shell's Gaza gas field sale hits problems

Reuters  |  LONDON 

By Ron Bousso

(Reuters) - It may prove to be Royal Dutch Shell's hardest sell. The Anglo-Dutch group is struggling to find a buyer for its field off the Strip, even among companies long used to dealing with projects fraught with political and security risks.

At least one European company has shown interest in the undeveloped Marine field following a reconciliation deal in October between the two rival Palestinian factions, a source involved in the talks said.

But the firm's discussions over the field, located about 30 km (20 miles) off the coast, have ground to a halt since tensions in the wider region have taken a fresh turn for the worse, the source told

"Until the political situation is resolved I really can't see anything happening here," he said.

Marine has long been seen as a golden opportunity for the cash-strapped to join the bonanza, providing a major source of income to reduce its reliance on foreign aid.

became the field's main shareholder and operator when it acquired in 2016 for $54 billion. Since announcing the BG purchase the previous year, has sold around $25 billion in assets to reduce its debt, and hopes to reach $30 billion by the year-end.

According to two industry sources, is currently in talks with the (PIF) to find a buyer for the giant's 55 percent stake in Marine.

Both and PIF, which is running the sale process and itself holds a minority stake, declined to comment.

Plans to develop the field - estimated to hold over 1 trillion cubic feet (tcf) of natural gas, the equivalent of Spain's consumption in 2016 - were put off several times over the past decade. The delays were due to internal Palestinian rivalry and conflict with Israel, as well as economic reasons, industry sources and former BG employees told

Then the mainstream party of Palestinian signed the reconciliation deal with Hamas, an Islamist movement which seized control in a decade earlier.

This allowed the internationally-recognised to take office in Gaza, and PIF said after the deal that efforts were underway to revive the Marine project as soon as possible.


However, a flaring of violence on the occupied since U. S. recognised as Israel's capital last month has highlighted the risks involving the project, the source involved in the talks said.

Marine, discovered at the end of the last century, lies between two rapidly expanding hubs in and Israel, both of which have attracted huge investments in recent years.

The development of Marine, though relatively small compared with the giant Eni-operated Zohr field in or Noble Energy's Leviathan field in Israel, is estimated to cost around $1 billion.

from the field would run power stations in and the town of Jenin, and could even be delivered to neighbouring "It is a field with a lot of potential if we could unlock its value," one source said.

Attempts to develop the field were put on hold repeatedly after Hamas, which Western countries and have designated as a terrorist group, took control over the Strip in 2007.

then put an economic blockade on Gaza, raising questions about the financing of the project and the sharing of future profits among the Palestinians.

This made any progress with the development impossible, according to a former senior BG employee.

has, however, said in the past it supports the field's development.

"Marine has not only an economic dimension, it also has a strategic dimension and diplomatic considerations," Yoav Mordechai, the top with the Palestinians, told

"But its operation is a question of the geopolitical situation. Certainly not with there. Certainly not in the absence of diplomatic arrangements. Because it is a dramatic source," Mordechai said.

is unlikely to go ahead with the development of the field in the foreseeable future, according to several sources. The company is also weighing the future of its large facilities in neighbouring Egypt, which it likewise acquired from BG.

(Additional reporting by in City, Ari Rabinovitch in Jerusalem; editing by David Stamp)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 18:48 IST