Two large natural gas deposits off Israel’s coast hold the potential to bring warmer relations between the Jewish state and its Muslim neighbors, even Palestinians despite faltering political talks.
Thanks to these natural gas fields—the Leviathan and the Tamar—Israel is expected to become a significant natural gas exporter over the next decade. The Tamar field is located about 56 miles off Israel’s coast in the Mediterranean and contains around 10 trillion cubic feet (tcf) of natural gas. The Leviathan, 81 miles off the coast, contains about 19 tcf and holds the title of the largest natural gas find in the 21st century.
To put this in perspective, the U.S. is rich with natural gas and has 322.7 tcf in proven reserves. Israel is roughly the size of Maryland and their two offshore natural gas fields alone total around 10 percent of U.S. reserves.
The discovery of these fields quickly attracted attention from Israel’s neighbors, and deals with Egypt, Jordan and the Palestinian Authority have already been signed. Some experts are hoping Israel’s surplus will bring cooperation through energy to the region, specifically with Turkey, Egypt and more deals with the PA.
“Ultimately Egypt and Turkey need energy, and the fact that we have it is creating a regional convergence of interests,” an Israeli diplomatic source told Reuters.
Other’s caution that political differences should be settled before business deals are cemented.
Making amends with Turkey
Turkey’s economy is one of the fastest growing in the world, but it has a distinct lack of energy resources to provide for itself. In 2012, nearly all of Turkey’s 1.6 tcf of natural gas was imported from Russia and Iran. Turkey would likely be interested in obtaining Israeli natural gas because of its proximity, but diplomatic hurdles stand in the way of constructing a new pipeline.
Though trade between Israel and Turkey has been stable over the years, their political relationship has been chilly at best since the 2010 flotilla raid, when the Israeli navy boarded a Turkish flotilla delivering aid to Gaza and killed several crewmembers. Both sides would need to put this episode in the past, as well as move beyond the prickly personal relationship between Turkish Prime Minister Recep Tayyip Erdogan and Israeli Prime Minister Benjamin Netanyahu, before committing to a trade deal and pipeline partnership.
Also in the mix is Cyprus, where a pipeline to Turkey would probably pass through. The island nation south of Turkey has liquefied natural gas export facilities and has, for years, been eager to invest in Israeli natural gas to ship to European and Asian markets.
Aiding Egyptian shortages
For years, corrupt Egyptian energy companies sold Israel natural gas for cheap prices, five times less than what they could have charged. This added to Egyptian resentment for their neighbor across the Sinai. After the overthrow of Hosni Mubarak in 2011 and the election of Islamist Mohamed Morsi, Egypt cancelled its contract with Israel, and repeated attacks were made on the pipeline between the two countries.
Egypt’s power outages have been well documented and its valuable LNG export facilities remain idle. Political turmoil and the lack of proper investment have caused an energy shortage in the Middle East’s most-populated country.
According to Hafez El Salmawy, managing director of the Egyptian Electric Regulator Agency, Egypt will fall short of the natural gas needed to power 20 percent of its electricity plants in summer 2014.
Israel recently signed its newest natural gas deal on May 5, when a deal was struck with a Spanish-owned LNG facility in Egypt that’s been underutilized since the energy crisis began. The nonbinding, 15-year agreement will send 2.5 tfc of natural gas from the Tamar field to a Spanish-owned LNG facility. Egypt’s Oil Ministry said, despite tensions with Israel, the deal on the table to needs “serve the national interest of the country.”
The exports, which are heading to Europe, will help wean some countries of their dependence on Russian natural gas as tensions over the crisis in Ukraine drag on.
A possible pipeline, underwater for security reasons, from Israel’s offshore deposits to Egypt’s idle export facilities could be beneficial for both sides to consider.
“Egypt will definitely be more than happy to get into some sort of indirect collaboration…. This will be good for everyone,” Magdi Nasrallah, head of the Department of Petroleum and Energy Engineering at the American University in Cairo, told the Christian Science Monitor. “In a deal like this, we will also gain because our LNG plants will be working and in return we will get some of the needed gas.”
However, a mutual distrust still exists between Israel and Egypt. Some, such as Nimrod Novik, a former Israeli business executive involved with Mediterranean natural gas, suggests multiple countries in the region work with Israel to construct pipelines exporting its natural gas, decreasing the likelihood that a deal falls through due to future political tensions.
Palestinian interdependence
Israel and the Palestinian Authority inked a 20-year, $1.2 million deal in January 2014 to send Israeli natural gas to Palestinian territory.
The deal has done nothing for other deeply rooted disagreements, but it does raise the possibility of peace through interdependence and cooperation.
“Commercially, the agreement is a win-win,” said Walid Salman, chief executive of the Palestine Power Generation Company, told Reuters. “Palestine and Israel are neighbors – if you’re going to get fuel, it’s best is to get it from your neighbor not from overseas.”
The deal was immediately met with opposition from some Palestinians, saying more partnership with Israel is moving away from the ultimate goal of independence.
A report from the German Marshall Fund of the United States also discredits the “peace pipelines” theory saying it’s founded “on the assumption that trade in energy leads to interdependence, and interdependence, in turn, favors peace.”
It claims there have been no other cases in the world “in which the incentive of energy trade led countries to make concessions on issues critical to peace agreements such as borders and the status of refugees.”
Despite all other factors, the current situation is that Israel has natural gas and its neighbors need it. When, where, and how it gets there is another point on a long list of issues to negotiate.
David Tonge, managing director of IBS Research and Consultancy in Istanbul, said that natural gas as a political solution is a hopeful outlook, but Israel’s newfound role as an energy provider could add problems to the region as well.
“It would be so lovely if we would live like Adam Smiths by self-interest, but I’m not sure that’s going to happen.” Tonge said. “[Potential gas profits] may create a potential carrot…but defining that carrot and how it is to be divided is a new problem, and it’s not an easy one to resolve.”
