The European energy crisis resulting from the Russian invasion of Ukraine demands quick solutions, and Israel's gas fields represent one of them. Senior officials from the countries of the region and the US, and gas industry executives, all tell the same story: the US is urging with all its might the implementation of solutions that will reduce Europe's dependence on Russian gas and oil.
Were it not for the Abraham Accords, the talks between the countries of the region would not be possible. The pressing need for an answer to Europe's energy problem has spurred the Americans to even greater involvement in promoting regional agreements, including bringing more countries into the circle. The possible solutions have been discussed at several meetings, including the meeting of regional foreign ministers, together with US Secretary of State Antony Blinken, in the Negev.
Russia supplied Europe with over 155 billion cubic meters (BCM) of gas last year, about 40% of the continent's consumption. On the assumption that some European countries will continue to receive gas from Russia, the need arises to replace 100-120 BCM of gas. The US has promised 15-20 BCM of liquefied natural gas (LNG) annually; Qatar is supposed to add 20-30 BCM, and the EastMed countries, headed by Israel, another 20 BCM. Of this, at least 10 BCM is due to come from Israel's Leviathan reservoir, which currently produces 12 BCM annually.
The meetings held by Minister of National Infrastructures, Energy and Water Resources Karine Elharrar in Egypt dealt with this subject, as did the meetings of Minister of Foreign Affairs Yair Lapid and Prime Minister Naftali Bennett with leaders and foreign ministers of countries of the region. At the same time, according to at least two sources, senior Israeli officials visited three countries that have no diplomatic ties with Israel in order to promote solutions.
According to a report by Reuters, Israeli, US and Iraqi-Kurdish representatives discussed transporting gas from the Kurdish autonomous region in northern Iraq to Turkey, and thence to Europe. Sources inform "Globes" that at talks involving some of the Gulf states, headed by the UAE, a more ambitious idea was discussed: a gas pipeline from the Gulf via Iraq to join up with the Turkish pipeline that already carries gas to Europe.
The Turks receive most of their gas from Russia, Azerbaijan, and Iran. They use some of it themselves, while the rest is transported to Europe. Israel, according to two sources, is assisting in these negotiations. This, however, is the longest-term solution of all, and it is also problematic, because of the need to traverse unstable Iraq.
The second solution under discussion is transporting Israeli gas to Turkey via a submarine pipeline laid from the Leviathan reservoir, while boosting Leviathan's output. The cost of laying such a pipeline extending for some 550 kilometers is about $1.5 billion, which compares with $6 billion for EastMed, the pipeline from Israel to Europe via Greece.
From Turkey's point of view, this is an acute need, and it arose in discussions between Israel's President Isaac Herzog and Turkish leader Recep Tayyip Erdo?an in Ankara. With elections due in Turkey in June 2023, Erdo?an seeks a solution for the soaring energy prices in his country, having had to raise the price of gas by 50% and of electricity by 28%.
Turkey returning to moderate countries fold
What is delaying this move is Turkey's reluctance to finance the laying of the pipeline, and its hope that the budget will come from somewhere else. "As long as the Turks don't see seriousness over the matter, someone putting down money to show that they too are prepared to take risks, it won't make progress. At present it's all talk and no action," a senior Israeli source says. Who could resolve this? The Emirates, led by the crown prince of Abu Dhabi Mohamed bin Zayed, who in recent months has been drawing nearer to Ankara.
According to a report in London-based Middle East Eye, within the next few months Turkey is expected to send an ambassador to Cairo, after a decade of almost complete estrangement and fierce rivalry between the two countries, which could further encourage Abu Dhabi to help it. This is a way for Turkey to demonstrate that it has returned to the fold of the moderate states.
Another possible solution via Turkey is a much shorter land pipeline, just 60 kilometers long, connecting from the pipeline in Syria meant to bring gas from Egypt to Syria and Lebanon. As reported by "Globes", one of the possibilities is increasing the supply of gas from Leviathan to Egypt, and exporting it via that network. The cost is far lower, just $150 million, and the construction time is also much shorter. Where is the problem? Again, it's a security and geo-political one: Syria is a torn country, and the Assad regime will find it hard to justify the transport of Israeli gas via Syrian soil to Turkey.
Two other solutions involve liquefying gas from Leviathan and transporting to Europe. The first is the construction of a pipeline from Leviathan to the liquefaction plants on the Egyptian coast, and transporting it from there to Europe in tankers. Laying such a pipeline is feasible. It will take about three years, and there will be no problem in financing it, as long as long-term sales agreements are reached with European consumers. It depends on the Israeli government, principally on the Ministry of National Infrastructures, Energy and Water Resources, which is familiar with the matter but is not getting the initiative going. The companies producing gas from Leviathan say that as soon as approval is received, everything will move ahead fast.
The Ministry of National Infrastructures, Energy and Water Resources said in response that the possibility of constructing a natural gas pipeline from the Leviathan production platform to the liquefaction plants in Egypt arose in talks between Israel and Egypt, and is being examined by the commercial companies, but no official request has been presented to the ministry.
The second possibility is more independent, and is up to the Israeli government. It involves offshore liquefaction plants close to the gas fields, mainly Leviathan. These are plants erected on ships, requiring short pipelines from the gas reservoirs to the plant, and from it to tankers to transport the LNG to Europe.
Quick solution: Compression rather than liquefaction
A faster solution is compressing the gas (CNG) rather than liquefying it (LNG), a much shorter process that does not require the construction of special plants but only compressors at the ports that will compress the gas into containers. Ampa Capital chairperson Shlomi Fogel says that several market players are examining the costs of this method.
What of Greece and Cyprus? They are meant to be part of the EastMed pipeline project, and should connect with any transport network that is decided on. Minister of Foreign Affairs Lapid has met the Cypriot foreign minister in Greece. Next week, Minister of National Infrastructures, Energy and Water Resources Elharrar will meet her Cypriot opposite number, with a solution to the dispute over the Ishai-Aphrodite gas field also on the agenda.
Israel a key player
Israel is in a key position, because of its gas production and its geographical location, but mainly because of the new status that the Abraham Accords have conferred on it. It is perceived as a facilitating country, having good relations with the Gulf states, Egypt, Jordan, and above all the US. Connecting Israel to regional energy networks is important not just for gas sales and from the economic point of view, but also as a means of strengthening and consolidating the regional moderate alliance.
Published by Globes, Israel business news - en.globes.co.il - on April 7, 2022.
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