Reconciliation gas between Turkey and Israel

Reconciliation gas between Turkey and Israel

Giorgia Lamaro (Agenzia Nova)
The agreement signed between the two countries for the exploitation and export of the blue gold from the Leviathan gas field is reshaping relations in the entire Eastern Mediterranean area, even in terms of construction projects for new energy infrastructure to transport Israeli gas to Europe

The reconciliation agreement officially signed on June 28, 2016 between Turkey and Israel, after a 6-year diplomatic freeze, now seems to have paved the way for close cooperation between the 2 countries in the gas sector. Just 48 hours after signing the agreement, Israeli Energy Minister Yuval Steinitz said that Turkey could soon become "an international energy hub," thanks to the construction of a gas pipeline that will transport Israeli natural gas from the Leviathan gas field to Europe, passing through the Turkish exclusive economic zone.
Steinitz added that "if there is an agreement," it will be signed by companies from both countries, "Israeli or American companies such as Noble (Energy) and Turkish companies. The 2 countries," added the Minister in an interview with the Turkish press, "will still have to give some form of consent to the agreement and agree on the construction of a gas pipeline from Israeli to Turkish waters." The Minister emphasized that "based on estimates," Israel will, in a few years, be able to export up to 2,500 cm of gas per day.

The Israeli gas transport alternatives

Israel has 3 options for exporting gas to Europe: the first is via Egyptian liquefaction plants. The second is through a gas pipeline that crosses Cypriot waters to Greece, but is a remote hypothesis due to its high construction. The third solution is to pass through Turkey. The latter case involves 2 further possibilities: the first is to export gas to Turkey directly via tankers, while the second, "the most likely" according to Steinitz, is to transport gas across Turkish waters to Europe. According to the Minister, a pipeline that passes through the Turkish Exclusive Economic Zone will cost around $2 billion and could be funded by the private sector with the agreement of both countries. According to Steinitz, the first gas exports to Turkey could start as early as in 2019. For some time, negotiations have been underway between Turkey and Israeli companies for the construction of an underwater gas pipeline to transport gas extracted from the Leviathan gas field, discovered in 2010 in the Eastern Mediterranean. At the end of last month, the Israeli consul in Istanbul, Shai Cohen, announced that agreement on the new gas pipeline was close. Cohen emphasized that Turkey was "the only country" capable of ensuring the appropriate infrastructure required for exporting gas to the West. Cohen also said that, from a geopolitical point of view, "without Turkey as a hub for energy resources and, specifically for the flow of natural gas from east to west and from north to south, it will be very difficult to be effective in diversifying sources". Cohen said that any gas pipeline between the Leviathan gas pipeline and the Turkish coasts would be "very expensive" and would require "a good will" on the part of investors, construction companies and both governments.

The route to normalization for the eastern Mediterranean

The CEO of Turcas Petrol, Batu Aksoy, announced in the meantime that at least 15 Turkish energy companies would be interested in creating a consortium to transport Israeli gas to Europe via Turkey. Aksoy confirmed that for months the managers of Israeli natural gas reserves have been in contact with Turkish companies and reminded that, in order to export Israeli gas, new bilateral agreements are also required between Israel and Cyprus and between Cyprus and Turkey: agreements that could change the geopolitics of the Eastern Mediterranean. Until now, in fact, Turkey was considered a common enemy by Israel, Cyprus, Greece and Egypt, while now the situation seems to have changed radically in favor of Ankara. According to the CEO of Turcas, the pipeline project between Israel and Turkey could therefore resolve "long-standing regional problems". In February, 2 private companies, Edeltech Group and the Turkish partner, Zorlu Enerji, signed a $1.3 billion agreement with US company Noble Energy and Israel’s Delek Group, responsible for the development phase of the Leviathan gas field. By virtue of this agreement, Edeltech and Zorlu will purchase 6 bcm of gas in 18 years which will be allocated to 2 plants run by both companies: the Tamar and Solad plants. The former will supply energy to the petrochemical plants of Haifa, while the latter to that of Ahsdod.
According to the Israeli media, the signing of the agreement is prelude for the future exploitation of the oil field which would be operational by the end of 2019. On May 18, 2016, the Israeli government and the Leviathan consortium, comprising Israel’s Delek Drilling (22.67%), Avner Oil & Gas (22.67%), Ratio Oil (15%) and US Noble Energy (39.66%), also modified the "stability clause" of the gas agreement that was rejected in March by the Israeli Supreme Court of justice. The amendment was then approved by the government to unblock the development of gas field, which, according to estimates should contain up to 500 bcm of gas. Works on the Leviathan site have been resumed in recent days, after which the partners to the consortium authorized Noble Energy to sign a $120 million agreement for the design of offshore platforms.