In a historic move, BG International Limited, a subsidiary of BG plc, has signed a deal with the Palestine National Authority (PNA) for exploration offshore Gaza. This agreement was ratified today in London by President Yasser Arafat.

The exploration licence, the first ever to be awarded by the PNA, will be conducted in three phases. The initial phase will result in the acquisition of seismic data and offshore exploration drilling as soon as technically feasible. At least two exploration wells are planned to be drilled in the first 18 months. The subsequent phases will see an offshore development plan implemented and gas brought ashore to local markets.

Based upon successful exploration and market development, BG International together with partner, Consolidated Contractors Company (CCC) may potentially invest sums in the region of US$500 million.

Frank Chapman, President BG International and Executive Director, BG plc said, "We are extremely pleased to be given the first exploration licence by the Palestine National Authority. This venture provides the opportunity to apply our considerable gas chain capabilities to locate and produce offshore reserves and develop local markets. This we will be doing in close collaboration with the authorities and partners."

Over the term of the 25-year agreement, BG International and CCC plan to establish Palestine's gas industry by conducting exploration, field development and building gas pipeline infrastructure