Palestinians report growing indications of oil in the occupied West Bank, which Israel may be quietly exploiting even as Israeli Prime Minister Binyamin Netanyahu resists U.S. pressure to freeze Jewish settlement expansion in the territory.

Givot Olam Oil Exploration of Jerusalem disclosed some years ago it had made a commercial find estimated at 980 million barrels at its Meged field in eastern Israel right on the so-called Green Line that demarcates the West Bank.

The geological strata at Meged appear to run eastward into Palestinian territory around the village of Rantis.

Meged-5, part of the 62,500-acre exploratory block the government leased to Givot Olam for 30 years in April 2004, has reserves estimated at 1.5 billion barrels.

That's not a major strike in the general scheme of things but it would have an immense impact on Palestinians' aspiration for statehood and the West Bank's shaky, Israel-dependent economy that's based on agriculture.

Even modest oil and natural gas reserves would transform Palestinian economic prospects and greatly enhance the viability of an independent Palestinian state in the West Bank, which Israel seized from Jordan control in the 1857 Middle East War.

Israel says little about its onshore oil program. This is supposedly restricted to pre-1967 Israeli territory, not the West Bank, which Palestinians see as the independent state to which they aspire.

The West Bank's been heavily colonized by Jewish settlements since 1967.

The 450,000 settlers, backed by powerful right-wing political forces, have vowed to resist if the territory is handed back to Palestinians under a long-elusive peace agreement.

Religious Jews, the hard core of the settler movement, claim God bequeathed the West Bank, which they call Judah and Samaria, to the Jews in perpetuity and vow never to surrender it.

The prospect of oil there supposedly colors the Israeli government's strategic thinking, giving weight to its reluctance to relinquish the territory occupied by force for nearly half a century.

In that regard, natural gas was found in the eastern Mediterranean off the Gaza Strip, a Palestinian territory now separate from the West Bank and ruled by the fundamentalist Hamas movement, 12 years ago by a consortium headed by British Gas.

But the Jewish state refuses to allow the Palestinians, or anyone else, to exploit the field unless it's through Israeli authority and refuses to pay the Palestinians the world market price for the commodity, or even share the proceeds with the Palestinian Authority.

Israel has since discovered major fields containing around 30 trillion cubic feet of gas in its own waters, enough to transform an economy that since the state's foundation in 1948 has had to import its energy needs.

But there's no sign it's prepared to relax its ban on gas production from the Palestinian field.

Daud Abdullah, director of the Middle East Monitor, disclosed that previously unavailable documents obtained from Britain's Foreign Office by the Palestine Policy Network under the Freedom of Information Act "confirm there is potential for a Palestinian petroleum sector in the West Bank."

Victor Kattan, program director of the PPN, known as al-Shabaka, observed: "The documents reveal that, in addition, Israel may be exploiting an oil field near Ramallah within the occupied Palestinian territories.

"The documents also point to the possible existence of two other oil fields near Qalqiliya and another near Hebron."

Qalqiliya stands on the West Bank border with Israel, and like Meged, could be drilled from Israel using horizontal drilling techniques.

Hebron is the largest city in the southern West Bank and is traditionally a flashpoint because Orthodox Jews maintain an enclave in the city.

The British documents cite Norwegian consultants at Meged as saying "they could not be sure that any field extended below the West Bank. But the strong likelihood is that it did otherwise why drill so close to the Green Line."

Givot Olam has been flaring off gas at Meged-5, indicating oil was being extracted, possibly from the West Bank.

"Geology doesn't follow geography," observed petroleum engineer Samer Naboulsi.

"Looking at the site of the flare and the shape of the overall field, it's clear this extends into the West Bank," he said.

"And even when extracting from the Israeli side, it'll be draining Palestinian reserves."