Discovery of Natural Gas in Israel is a World-class Game Changer

natural gas israel stove image

The massive natural gas find in Israel and political tensions with Turkey, could put Turkey out of the energy story with Israel. It’s a big deal, says Washington based energy analyst Gal Luft.

A door has been closed. But amid the roar, the creak of an opening window was faintly audible. This window, a gigantic deposit of natural gas called Leviathan, 6.5 times the size of Tel Aviv, was found, roughly 100 nautical miles from where the flotilla fiasco took place and well within Israel’s extended territorial waters.

An old adage says that when God closes a door, somewhere he opens a window. To most people, the events off the coast of Gaza marked a sharp decline in Israel’s strategic posture. The Mavi Marmara incident sparked international condemnation and delivered what may have been a death blow to Jerusalem’s already precarious relations with Turkey. For decades that country was Israel’s closest ally in the Muslim world, but since the election of Recep Tayyip Erdogan, it is increasingly in the thrall of fundamentalist Islam.

A door has been closed. But amid the roar, the creak of an opening window was faintly audible. This window, a gigantic deposit of natural gas called Leviathan, 6.5 times the size of Tel Aviv, was found, roughly 100 nautical miles from where the flotilla fiasco took place and well within Israel’s extended territorial waters.

This discovery may provide Israel with security in terms of its supply of electricity, turn it into an important natural gas exporter and provide a shot in the arm of some $300 billion over the life of the field – one-and-a-half times the national GDP – to the Israeli economy, already one of the most resilient in the world.

More importantly, this discovery is nothing short of a geopolitical game changer. To understand its magnitude, consider this: The world’s biggest gas discovery in 2009, 238 billion cubic meters, was made by a US-Israel consortium at a site called Tamar, 60 miles off the coast of Haifa. The nearby Leviathan field is estimated to be twice that size.

Altogether the basin in the eastern Mediterranean to which those fields belong could contain an amount of gas equivalent to one-fifth of U.S. natural gas reserves. For a small country like Israel, such a bonanza could not have come at a better time.

Until recently, Israel was facing an energy predicament. Its fast-growing population – and the even faster-growing Palestinian Arab population to which it also supplies electricity – and the declining reserves of Egypt, its main gas supplier, required the identification of new sources of gas for electricity production.

One alternative was to import natural gas from Russia and the Caspian Sea via Turkey. To this end, Turkey and Israel negotiated the construction of a subsea pipeline. But with the deterioration of their relations, this option gradually became unfeasible. Another option was to import gas from Qatar, hardly a reliable supplier. Yet a third, more costly, possibility was construction of a liquefied natural gas terminal, which would enable imports from various suppliers.

The discoveries at Tamar and Leviathan solved the problem: Israel will no longer have to import natural gas. Its dilemma now, rather, is deciding where to export the excess and how to reap the most geopolitical gains from its new status as an energy exporter.

Geographically, the most natural market is Europe, where any non-Russian gas is more than welcome. There are three ways for Israel to access this market. The first is to construct a pipeline to Turkey, where Israeli gas would join product from the Caspian region en route to Central Europe. This option is highly unlikely to be realized in the current atmosphere of Israel-Turkey relations.

Alternately, and more likely, Israel could construct a pipeline to Greece via Cyprus or pipe it inland, liquefy it and export it to any European liquefied natural gas terminal by sea. Europe is not the only potential market in such a scenario. Once liquefied, Israeli gas could be directed to China, South Korea and Japan, which collectively consume more than half of the world’s LNG.

From a geopolitical standpoint, gas exports to India would be most beneficial to Israel. With hundreds of millions of its citizens facing energy poverty, India urgently needs reliable natural gas suppliers. One option for that country is to join the Iran-Pakistan pipeline – a project aimed at connecting Pakistan to Iran’s South Pars field by 2014. Should India decide to extend the pipeline, it will become beholden to Iranian gas for decades to come, to the detriment of Western efforts to weaken Iran economically.

Alternately, should India decide to construct LNG terminals along its coast, it will be able to import natural gas from Israel as well as other exporters, like Qatar and Saudi Arabia.

The creation of an energy corridor from Israel to the Indian subcontinent would mean that Israel would have to retrofit the existing 150-mile oil pipeline linking the Red Sea port of Eilat with the Mediterranean port of Ashkelon. Once this pipeline commences operation, Russian and Caspian natural gas could reach the Asian markets as well.

Ironically, the biggest casualty of such an energy corridor will be none other than Turkey, which now enjoys an unchallenged status as an energy bridge between East and West. Energy transit fees are an important source of income to the Turkish economy.

In the coming years, Israel will have to decide whether to direct its gas to Asia or to compete with Turkey over access to the European gas market. Should it choose the latter, Turkish-Israeli relations will remain in rough seas.

Read more on Israel’s natural Gas:
Israel’s Oil Tycoon Seeks Higher Ground
Tamar’s Natural Gas Could Fuel Better Place Cars
Israel Strikes Massive Natural Gas Pocket

This post has been reprinted with permission from the Cutting Edge News. Cutting Edge energy and security analyst Gal Luft is executive director of the Institute for the Analysis of Global Security, and co-author of “Turning Oil into Salt: Energy Independence through Fuel Choice.”

Image via conanil

2 thoughts on “Discovery of Natural Gas in Israel is a World-class Game Changer

  1. dc bateman

    im not concerned about turkey. the armed forces have eliminated the threat of socialist and islamist take overs in the past and will most likely do it again if erdogan the magnificent has one melt-down too many for them. they are the ultimate power in the nation and devoted to the secular state ataturk established. i believe the people are more loyal to ataturk than to the islamist fanatics. and if they dont step in and radical islam takes over they lose their markets and alienate their primary arms suppliers and their nato coverage. nobody in the neighborhood likes turks, except israel. they should remember that. wonder if the minefields along the syria border have been removed yet? and have they told the turkish people to stop refering to them as “arab dogs”?

    Reply
  2. Itay

    And not a word about the risks of off shore drilling in light of the disaster in the Gulf of Mexico and now the one in the Red Sea?

    Reply

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