Turkish cos mull consortium to import Israeli gas

Leviathan

Turcas CEO Batu Aksoy says that at least 15 Turkish energy companies have expressed interest in forming a consortium.

At least 15 Turkish energy companies are considering forming a consortium to promote a natural gas import deal from Israel, the Turkish media reports. According to Turcas CEO Batu Aksoy, Turkey could be an anchor customer for gas from Israel's Leviathan field by 2020 and gas could also be piped onto Europe.

He said, "The main advantage of creating a consortium is that companies can share the risks in such a major deal." He told Turkish daily Hurriyet that it was not possible for a single company to deal with such big exports, adding that the estimated 8 billion cubic meters (BCM) of Israeli gas could be taken on an annual basis by sharing the risks with reliable partners.

Aksoy added that Turkey consumes 50 BCM of gas annually and wants to reduce its dependency on Russian gas, which supplies about 55-60% of the country's needs.

He said, “The less dependent a country becomes on a sole provider, the lower gas costs it faces. Europe wants to decrease the share of Gazprom in its gas market by opening their gas market more and increasing their liquefied natural gas [LNG] sources… Turkey needs to do the same. Turkey has been connected to Russia, Iran and Azerbaijan by pipelines. There are two other sources to maximize the pipelined gas potential: The eastern Mediterranean and Iraq… The inflow of natural gas via six or more pipelines from five suppliers rather than four pipelines from three suppliers will enable Turkey to gain a much bigger bargaining position in gas price talks. We believe eastern Mediterranean gas will be a huge chance for Turkey on the road to becoming an energy hub."

About 30% of the gas consumed in Europe comes from Russia, and Europe too is seeking to diversify its sources.

There is economic feasibility but politics is more complicated

Before a gas export deal can go ahead, Israel and Turkey must sign a reconciliation agreement. For many months now, the Leviathan partners have been talking to Turkish companies about Israeli gas exports. Since the Marmara incident in 2010, diplomatic relations between the two countries have deteriorated and Turkish President Recep Erdogan has prohibited gas imports from Israel.

Aksoy said, “In these projects, the construction process lasts the shortest period of time. Political discussions, the issuance of intergovernmental agreements or the financial feasibility issues take a much longer time."

Other complications include: Egypt, which would likely gain preferential treatment should it want to import Israeli gas; and Cyprus, which would have to approve any Israel-Turkey pipeline, which would have to pass through its territorial waters.

Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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