Israel, Palestinian Authority discuss developing gas off Gaza coast

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(Reuters) - The U.S.-backed Palestinian administration is negotiating with Israel for permission to develop natural gas off the coast of the Gaza Strip, Israeli and foreign diplomats said on Sunday.

Mediterranean gas could be a windfall for the Palestinian Authority (PA), which operates under Israeli occupation in the West Bank and has alarmed the World Bank by sinking into fiscal crises amid shortfalls in international aid.

As envisaged in the exploratory gas talks initiated by peace envoy Tony Blair, the PA would alone levy tariffs on any eventual revenues from private pumping in Gazan waters, though breakaway Hamas Islamists govern the coastal enclave.

Israel, which keeps Gaza under a close maritime blockade, said it had held "initial negotiations" with the PA, and at its behest, about the Palestinian gas.

"Development of the Gaza Marine gas field will generate revenues that could contribute dramatically to Palestinian fiscal sustainability," the Israeli Foreign Ministry said in a report, published on Sunday, to world powers coordinating economic aid for the Palestinians.

PA officials could not immediately be reached for comment. more

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