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Israel faces geopolitical tangle with natural gas
Friday - 3/29/2013, 7:28pm EDT
JERUSALEM (AP) -- Recent discoveries of massive offshore natural gas deposits, set to begin flowing in the coming days, are turning into a mixed blessing for Israel.
The deposits are expected to provide Israel enough natural gas for decades and transform the country, famously empty of natural resources, into an energy exporter. Yet selling this gas overseas will require Israel to navigate a geo-political quagmire that risks angering allies and enemies alike. Amid this uncertainty, Israel still has not formulated an export policy.
"Instead of being an ingredient which serves to calm the tensions of the eastern Mediterranean, (the discoveries) provide instead another impetus for rivalry," said Simon Henderson, a fellow at the Washington Institute for Near East Policy. "There is a reason this is often called diplomatically trapped gas."
Israel discovered two large fields, Tamar and the heftier Leviathan, in 2009 and 2010. Tamar, which holds an estimated 8.5 trillion cubic feet, is set to begin pumping to the Israeli market in the coming days, while Leviathan, which boasts an estimated 16 to 18 trillion cubic feet of gas, is expected to go online in 2016, the approximate time when exports are expected to begin.
The discoveries are just a portion of the huge reserves in the Levant Basin, which the United States Geological Survey estimated in 2010 holds some 122 trillion cubic feet of recoverable natural gas.
While Israel's finds are minimal compared to gas giants Russia, Iran or Qatar, they are more than enough for the country's domestic needs and would enable the country to reduce its reliance on costlier and dirtier oil and coal. Nearby Cyprus has also become newly resource-rich, and Israel's other neighbors, including enemies, may discover their own deposits.
In all, Israel has just the world's 46th largest supply of proven natural gas reserves, according to the CIA Factbook. But the country's proximity to Middle Eastern and European markets could make it an important regional player. For oil companies hoping to profit from the new wealth, the biggest hurdle remains the lack of an export policy.
"The challenge we face now is ... the failure to decide on export," said Bini Zomer, an official in Israel with Noble Energy, the Texas-based company that has led exploration efforts. "The policymakers seem to lack a sense of urgency."
The challenges are many. Cooperating with Cyprus risks antagonizing Turkey, an important one-time ally whose relations with Israel have greatly cooled in recent years. The neighboring Arab countries Egypt and Jordan might provide opportunity, albeit with some political risk. Europe is a potentially larger and more stable market, but reaching the continent is a logistical challenge and risks angering Russia.
Israel has already broached volatile turf by opening talks with Cyprus. The two countries, whose territorial waters border each other, are looking into how best to jointly exploit their mineral reserves. One option is to pipe the gas to Cyprus, where it could be processed for export to Europe and beyond.
The gas discoveries have helped to warm historically chilly ties with Cyprus, which has traditionally sided with the Palestinians and has looked on warily as Israel built military and trade relations with rival Turkey.
Israel's ties with Ankara deteriorated dramatically over the past three years since an Israeli naval raid on a Gaza-bound flotilla killed nine Turkish activists. The cooperation with Cyprus has further angered Turkey, which has claimed some of Cyprus' offshore supplies as its own.
Israel and Turkey announced last week that they were restoring full diplomatic relations after Israel apologized for the flotilla deaths. But relations remain cool and it remains unclear how Israel's links to Cyprus will shape up.
The Israel-Turkey rapprochement is on the minds of Cypriot authorities as future gas revenues are seen as the country's best hope to pull it out of the economic morass that has decimated its banking sector.
"I assure you that we are monitoring the situation and we will act accordingly to protect the country's sovereign rights," Cyprus' Commerce Minister Giorgos Lakkotrypis recently said. He said the country's president, Nicos Anastasiades, is planning a trip to Israel to discuss energy cooperation matters.
Cyprus has looked to Israel to pool their respective gas finds in order to build a gas processing facility on the island that could be used to supply domestic demand and liquefy it for export.
Experts say the most obvious route to Europe from Israel would be through Cyprus, then to Turkey, but those traditional enmities could block such a solution. Cyprus fears that Israel may instead opt to sign a deal to pipe its excess gas to Turkey directly via a pipeline in order to reach European markets.