Two Israeli oil companies have signed 2 year contracts which will supply all of the gasfuel requirements of the West Bank and Gaza Strip thus extending Israel’s monopoly and strategic leverage over the Palestinian Authority and the lives of Palestinians.The Paz Oil Company Ltd has extended the Palestinian Authority gas supply contract by two more years. The contract is worth an estimated NIS 1.8 billion annually, or 11.6% of Paz’ total sales, and constitutes 50% of the total gas demand within the West Bank and Gaza Strip.

CEO Yona Fogel said: “This is an important client for us. I see the renewal of the contract as an achievement and which will mark seven years of the relationship between the two sides”. He added: ‘We were never the sole supplier, and as part of our new contract, we’ve reduced the credit terms of the client.’

The other part of the contract was won by Oil Refineries Limited (BAZAN) who announced that it will directly supply fuel products to the Palestinian Authority for a period of two years beginning in October 2012.

Oil Refineries Ltd. (ORL), located in the bay area of Haifa, is Israel’s largest Oil refinery. Paz Oil is owned by a number of investors although in the past it was state controlled by Israel.

This dependence on Israel for its fuel supply has huge strategic implications for the Palestinian Authority’s freedom of action and the living conditions of Palestinians.

And yet, as reported by Charlotte Silver on on May 11, the Palestinian Authority appears silent about Israel’s exclusive control over the distribution of fuel to the occupied the Occupied Territories and to the Palestinian population despite the fact that the West Bank and Gaza Strip should be able to import cheaper petrol/fuel from oil-rich neighbors and alleged allies, or tap into gas reserves off the coast of Gaza.

According to Charles Shamas, a founder of the Mattin Group, a Ramallah-based research and advocacy organization, Israel’s monopoly on supplying fuel to the West Bank is used as part of a conscious strategy to maintain the Palestinians’ structural dependence on Israel and its political decision-makers.

“Such supply monopolies are a form of power. They provide easy ways to exert political pressure on the Palestinian Authority and ordinary Palestinians and to enforce their compliance with Israel’s interests,” said Shamas.

The West Bank is feeling the effects of a global hike in the price of oil, and consequently, almost everything else. Rising gasoline prices are one sign of the effect of rising oil prices on Palestinians, the price of basic foodstuffs – maize, vegetable oil and bread – is another.

Meanwhile, as reported yesterday by IMEMC, the Gaza Strip has spiraled into an acute phase since smuggled Egyptian gasoline has slowed to a trickle and the Hamas-led government in Gaza has been forced to resume obtaining expensive fuel from Israel.

Israel exercises exclusive rights over the supply of fuel to the Palestinian population, and the expensive, and in the case of Gaza, also very limited, gas/oil is a consequence of Israel’s exclusive control over supplies, a control that has yet to be challenged by the Ramallah-based Palestinian Authority.

Gaza has felt the powerful flexing of Israel’s strategic muscle, being subjected to arbitrary electricity cuts and a constant power shortage because Israel limits the supply of fuel entering the coastal strip to levels far below the needs of its 1.6 million inhabitants.

It is against this background that Shamas sees the failure to develop Gaza’s offshore gas fields, discovered 13 years ago as a lost opportunity.

“The gas field issue was initially welcomed in the hope that it would give [the West Bank and Gaza Strip] a greater measure of independence,” Shamas explained.

Discovered in the 1990s by the British Gas Group, Gaza’s gas fields are estimated to be 1-1.4 trillion cubic feet in volume. While this amount appears small compared to the energy reserves of Gulf neighbors, it is substantial enough to meet Palestinian domestic needs for 15 years.

Since British Gas conducted initial studies and concluded the fields were financially viable, there has been an agreement between British Gas, the Palestine Investment Fund and a firm called Consolidated Contractors Company to develop and commercialize the fields. Yet 13 years after plans to develop the fields were drawn up, not a single gallon has been extracted.

“Developing Gaza’s gas fields would break one important Israeli supply monopoly but they don’t want the Palestinians to develop energy self-reliance,” Shamas said.

Victor Kattan, author and Program Director of the research group al-Shabaka, recently revealed that despite rumors circulating as recently as 2011 that Israel was still in negotiation with the PA over the terms of their drilling off Gaza’s shore, all talks stopped in earnest in 2007.

During Kattan’s own investigation, he discovered that plans hit an insurmountable obstacle after Israel would not allow Palestinians access to their own gas fields before they promised to sell it to Israel at a significant markdown from global prices.

Israel is expected to have a source of fuel from the Tamar gas field – approximately 80 kilometers off of the coast of Haifa – in 2012, so this intransigent stance appears to be rooted in a political desire to maintain control, rather than a need to secure cheap gas.

“For some time Israel has effectively said to [the Palestinian] business community, ‘We want you to do business, but not without us.’ Monopolizing access to business opportunities is another means of control that costs Israel nothing,” Shamas said.