Israel Considers Options for Gas Exports to Europe

The newly found natural gas reserves offshore Israel and Cyprus, seems to be getting closer into the European markets, according to local stakeholders.

For the moment, the options that appear to be practical for the movement of produced gas include the construction of an LNG terminal in Cyprus and the transfer to the European markets via vessels.

A second option that is backed by Greece’s DEPA, is the construction of a pipeline stretching all the way to mainland Greece and to the Southeastern European gas networks, rival of some short to the Southern Corridor.

The recent visit of the Greek Defense Minister to Israel brought to the table the issue of security regarding the movement of gas. One of the major concerns for all stakeholders involved is the political and even military risk posed by the existence of a stable transfer route from the Eastern Mediterranean to the Western markets. For that reason the Israelis are assessing the need to bolster their naval capabilities and for the Greek Navy to be involved as well in securing the reserves.

According to available information, the general director of the Israeli Ministry for energy and water resources Shaul Tzemah, has recently delivered his estimates that detail the export of 55% of Israeli gas to foreign markets. In that respect, the main destinations are the Balkans and also friendly neighboring countries to Israel such as Jordan that lack local energy resources.

During the talks between the Greek Defense Minister Panos Pnagiotopoulos and Israeli Premier Netanyahu, the Israeli side requested the assistance of the Greek Navy regarding the protection of a floating LNG station that would be based in the Israeli exclusive economic zone. This is a new idea centered on the main gas reserve found, that of « Leviathan » discovery.

At the moment, no definite decisions have been taken given the variety of strategic and military variables that need to be reviewed prior to such development taking place. The sheer size of a floating LNG project provides an attractive target for outside forces such as Hezbollah and the Israeli offshore territory has already considerable maritime traffic which could be an obstacle.

The DEPA backed pipeline to Greece, although favourably placed in respect to the security aspect, it is an expensive endeavor with technical challenges. Leviathan partners Noble Energyand Delek have to date, been hesitant in supporting such a project.

This places, for the moment,  the option of creating an LNG station in Cyprus as the number one option, although there are also other thoughts been expressed by EU states, such as exporting the gas directly to Turkey via a pipeline and exporting the bulk of the commodity there, so as to perform a real diversification of the Turkish natural gas imports.

That option has to deal first with the perennial Cyprus issue, as well as with the deteriorating Turkish-Israeli political relations. In the meantime the Cyprus media relay that U.S. diplomacy has been active lately to find a median line regarding the disagreement between Lebanon and Israel for their respective exclusive economic zones.  The settlement of these issues and the normalization of situation nearby Syria, will allow the phase of selecting one viable option to commence.

It is more than certain that this will be materialized after the American elections and in conjunction with the overall power architecture in the Middle East, as it is being shaped by the Arab Spring, the Syrian revolt and heightened probability of active conflict with Iran.

 

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