Israel Pushed to Spell Out Gas Export Plan

May 20, 2013

Noble Energy of Houston, which discovered Israel's big natural gas fields in the eastern Mediterranean, is pressing the government to decide on an energy export policy as the prospect of an undersea pipeline to Turkey gains credibility, UPI reports.

Israel's deep-water Tamar field, found in 2009 and containing an estimated 9 trillion-10 trillion cubic feet of gas, began production March 31.

But Nobel and Israeli partner Delek Energy, the team that discovered Tamar and other fields off Israel, is reluctant to develop the much bigger Leviathan field, found in 2010, until it the government makes up its mind what it wants to do.

Leviathan is expected to go onstream in 2016.

"We need to commit to develop Leviathan this year, but we can't do it without an export policy," Nobel Chief Executive Officer Charles Davidson cautioned in April.

The government wants to use the gas initially to fuel power stations, thereby reducing electricity costs by cutting out expensive imported fuel. But there will clearly be a large volume available for export.

In 2012, Israel set up a committee to advise the government on the gas reserves, among the largest offshore finds in the world, and it reportedly recommended exporting just over half the country's gas production.

Nobel says it needs to export, and soon, to underwrite the $4 billion cost of developing Leviathan.

More strikes are likely in Israel's Exclusive Economic Zone, which abut Cypriot waters where Nobel Energy has found in gas in the Aphrodite field.

Initial estimates are it contains at least 7 tcf, with more strikes expected.

Turkish Energy Minister Taner Yildiz said a couple of weeks ago it's too early to talk of an energy deal with Israel but that Ankara's open to energy cooperation.

"This is a rare positive development in a region bedeviled by geopolitical tensions that threaten to curb the eastern Mediterranean's potential to benefit collectively from its huge reserves of offshore natural gas," Oxford Analytica observed.

The Financial Times mused that pipeline projects like this "could reshape the map of the eastern Mediterranean by deepening ties between Israel, Turkey and other states in the region."

But there's a lot of bad history to surmount before that can happen.

Israel's initial approach was to team with Cyprus, 150 miles west, pool their gas production and pump it to Greece via an underwater pipeline for Europe.

But the Greek Cypriots in the southern sector of the island, divided when Turkey invaded to 1974 after a short-lived coup aimed at union with Greece, have gone into economic meltdown because of the eurozone crisis and are trying to negotiate a bailout.

There was talk of building a floating liquefied natural gas plant, probably costing around $2 billion, from where the LNG would be shipped by special tankers to Europe or beyond.

But a facility like that's highly vulnerable to attack and the idea seems to have been discarded.

The current rapprochement between Israel and Turkey, whose 1996 strategic alliance went sour in May 2010, points toward