Breaking News

Natural gas exportation by Israel: The potential economic and geopolitical impacts

Click photo to download. Caption: An aeriel view of the Israeli gas rig Tamar, situated about 80 km off the Israeli northern coast. Credit: Albatross Aerial photography/Nobel Energy/FLASH90.

By Alex Traiman/

Israel recently crossed a major energy milestone when the daily supply
of natural gas began flowing from the Tamar offshore reserve—gas that is expected
to power Israel’s electricity production for the coming decades.

Tamar was the first large-scale hydrocarbon resource discovered in international waters and claimed by Israel. After more than four years of drilling, the flow of natural gas from the Tamar gas field has begun.

But while the domestic use of gas makes Israel less dependent on foreign
energy than ever before, it is the export of natural gas that has the potential
to boost Israel’s economy and change Israel’s strategic position in the global
marketplace. An even larger natural gas reserve, Leviathan, is expected to
begin supplying energy in 2015.

According to industry experts, export revenues will provide a boom to
Israel’s economy, as well as offset the tremendous costs of developing the
infrastructure needed to extract and transport the natural gas from the sea to
Israel’s electricity plants.

“The infrastructure is financed by consumption agreements,” Delphi
Global Analysis founder David Wurmser, who consults for one of the major energy
firms invested in the Leviathan basin, told

“Investors will not spend billions of dollars developing an
infrastructure for money to be returned in 20 to 30 years,” he said. “The
timeframe needs to be much shorter than that.”

Currently, Israel is considering exporting natural gas to Western
European nations along the Mediterranean Sea, including Spain, France and
Italy, which are currently supplied with gas by North Africa.

If Europe were suddenly to lose its supply of North African gas due to
regional instability, nations may desperately seek to sign an agreement with

If that happens, Israel would then have “great leverage to demand
European Union subsidies for creating infrastructure,” Wurmser said. “But
right now, while the Europeans understand their vulnerability, their demand is
basically satisfied,” he said.

But Israel supplying natural gas to Europe may raise a major red flag
for Russia, the primary supplier of natural gas in Eastern Europe.

“Europe is an integrated gas network. The closer you get to Eastern
Europe, the more nervous the Russians get. They have a chicken in this
fight—even in Southern Europe,” Wurmser said.

Almost a year ago, Russian President Vladimir Putin made a historic trip
to Israel, and brought a large economic delegation. According to Wurmser,
a significant portion of the visit had to do with natural gas. Putin
likely expressed his concerns regarding Israeli intentions to export, as well
as to examine the possibilities for joint marketing opportunities.

“Russia is looking with great sensitivity at everything going down in
the Eastern Mediterranean—from Turkey to Greece to Cypress to
Lebanon. Russia has defined the Eastern Mediterranean as a significant
production zone, and Israel stands at the center of it. So you can count
on the fact that the Russians were trying to figure out what piece of this pie
they can get from Israel,” Wurmser said.

Asia could emerge as a more likely option for Israeli gas exports due to
what Wurmser calls “acute natural gas shortages” on that continent.

“Asia …read more

Please ShareShare on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on StumbleUponPin on PinterestEmail this to someone

Jewish Content

Posted by on April 10, 2013. Filed under Breaking News,In This Week's Edition,Israeli News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.