Turkish official proposes gas pipeline from Israel

Mithat Rende: Construction of a pipeline to Turkey is the best way to export Israeli gas.

"Construction of a pipeline to Turkey is the best way to export Israeli gas, both in terms of economics and in terms of energy," said Ambassador Mithat Rende, Director General for Multilateral Economic Affairs at Turkey's Ministry of Foreign Affairs at the Energy and Economic Summit, sponsored by the Atlantic Council, in Istanbul last week. Participants included national leaders from Europe and Central Asia and top global energy executives.

Rende's remark was directed at Eco Energy co-CEO Dr. Amir Mor, the only Israeli participant to speak at the conference. The energy consultant was a panelist on the "Eastern Mediterranean Gas and Transit" panel. Rende also read from a Turkish government decision to boycott all the oil majors which won Cypriot offshore gas exploration. Put simply: yes to Israeli gas; no to Cypriot gas.

Mor, an expert on natural gas and international energy markets, replied, "Turkey is playing a very unconstructive role in the region. It is obvious that in the long term, Israel and Turkey's interest is to renew their relations, but can anyone imagine today that Israel and Cyprus will pin their hopes on Turkey?"

Rende's remarks were clearly heard in Jerusalem. The veteran Turkish diplomat is not suspected of being pro-Zionist. He is known in Israel as the author of the official Turkish government report on the Marmara Mavi incident during the Gaza flotilla in 2010, which nearly ruptured Israeli-Turkish relations. "A man like Rende would never say what he did without the backing of his superiors," former Ministry of Foreign Affairs director general Alon Liel, an expert in Israeli-Turkish relations, told "Globes". "Previously, Turkish comments on gas issues were mostly negative. They include questioning Israel's rights in reservoirs. This was therefore a very interesting remark, which may indicate internal differences of opinion in Turkey, just as they exist in Israel, by the way."

"Besides the technical aspects of this matter, there is the political and strategic dimension," says Ministry of Foreign Affairs spokesman Yigal Palmor. "It isn't the operational echelon that makes the decisions here, but the highest political echelon."

Sources in Jerusalem linked Rende's remarks with the relatively restrained tone of Turkey's comments during Israel's current confrontation in Gaza. The peak was a pro-Israeli remark on Friday by Turkish Deputy Prime Minister Bülent Arınç, who proposed that Turkey open direct talks with Israel to end the campaign in Gaza. Prime Minister Recep Tayyip Erdoğan dismissed Arınç's remarks, publishing a statement two hours later, in which he said, "Which relations are you talking about?"

But the Middle East's volatile reality is putting Erdoğan's policy towards Israel in direct contradiction with Turkey's energy and economic interests. "Turkey is now in a very problematic situation in terms of gas supplies," an Israeli source told "Globes". "The Turks are desperately seeking new energy supplies, and they are prepared to buy liquefied natural gas (LNG) at very high prices."

Turkey must import all its natural gas needs - almost 40 billion cubic meters (BCM) a year (compared with 6 BCM consumed by Israel). Turkey's gas consumption is expected to grow by 50% over the coming years. Turkey's gas comes by pipelines from Iran, Azerbaijan, and Russia, and it imports the more expensive LNG by tanker from Algeria. In the past few months, there have been supply disruptions in the supply of Iran gas because of explosions on the pipeline. In the background, tensions between Iran and Turkey are rising because of Iran's strong support of Syrian President Bashar Assad.

The supply of Russian gas to Turkey is not guaranteed either, because of Syria's civil war. Tensions between the countries were greatly heightened when Turkey detained a Russian plane which was carrying weapons to Assad, and because of claims that Russia is responsible for the executive of two Turkish pilots who parachuted into Syrian territory. Turkey has also succeeded in complication its relations with Azerbaijan, and deep disagreements between the countries are delaying construction of a critical gas pipeline from Azerbaijan's huge Shah Deniz field to Turkey.

Diplomatic alienation despite economic logic

The possibility of sending gas by pipeline from Israel to Turkey has never come up before, although deliveries in the opposite direction have been considered. A report by the International Crisis Group was presented at the Energy and Economic Summit in Istanbul. The report examined three options for exporting gas from the Middle East: a pipeline to Greece; a pipeline to Turkey; and the construction of an LNG facility. The pipeline to Greece was deemed almost impossible to build, because the Mediterranean basin is too deep along the route to lay it. The route to Turkey runs along relatively shallow water, and laying a pipeline is a straightforward engineering project. A pipeline to Turkey would cost a tenth of the cost of building an LNG facility.

"The big problem jeopardizing a future project of this kind is the political crisis between Turkey and Cyprus," says the International Crisis Group.

"Turkey is very worried about the improving relations between Israel and Cyprus," says Liel. "This is a double blow: not only does Turkey not get gas, but the gas goes to its enemy, Cyprus. Besides Turkey's huge gas consumption, Turkey has invested heavily to become a regional energy hub, and this status will be at risk if an alternative export route is opened."

Liel believes, however, that it is premature to even think about signs of a change in Israeli-Turkish relations. "Diplomatic relations between Israel and Turkey are currently completely severed, at Erdoğan's order. So long as this lasts, the possibility of exporting Israeli gas to Turkey will be wishful thinking, despite the economic logic."

Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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