Will Arab countries buy #Israel’s natural #gas? – Al-Monitor: the Pulse of the Middle East #Palestine

The Institute for Palestinian Studies (IPS) held a symposium in Beirut last week under the title of “Gas in the Eastern Mediterranean: challenges and possibilities.” It tackled, among other things, the geopolitical and economic dimensions of gas discoveries in the Eastern Mediterranean waters, and especially the signing of memorandums of understanding (MOUs) to supply Arab states with gas from Israeli fields for the next 20-25 years.
Summary⎙ Print In a recent conference the Institute for Palestinian Studies discussed the multilateral agreements to supply Arab states with gas from Israeli fields.

Author Walid Khoudouri Posted December 23, 2014
Original Article اقرا المقال الأصلي باللغة العربية

The symposium discussed the phenomenon of global companies willing to cooperate with Israel, knowing that most of them had previously refrained from such cooperation for fear of being boycotted by Arab states, with the exception of the US company Noble Energy, which has thus far worked on all Israeli discoveries.

The studies showed a new Israeli policy that aims to penetrate the Arab energy sector. If Israel succeeds in so doing, then it will gradually influence the electricity supply and prices in concerned countries. The Israeli attempt is a penetration into the Arab energy industry.

The symposium showed that Israel has not yet signed any agreement with Jordan or Egypt to sell gas, as the issue is still under discussion. However, MOUs between the involved companies have been signed, and these need governmental approvals in order to be completely official.

It is noteworthy that the Jordanian parliament has recently discussed this topic and advised the government not to approve the import of gas from Israel. At the same time, both Egypt and Jordan are trying to import gas from other countries to avoid the purchase of Israeli gas. Egypt is negotiating a possible import deal with Cyprus through a pipeline or the import of liquefied gas from Algeria. Jordan is implementing a project in Aqaba to import liquefied gas from Qatar or other countries. The goal of the two countries is to secure gas supplies as soon as possible and at commercial rates.

As for the agreement that was indeed signed, it was with the Palestinian Electric Company whereby the latter supplies gas for a quarter of a century to the Jenin power plant, which is still under construction. Israel considered the gas supply to Jenin as a supply for Israeli internal consumption rather than as a part of the export abroad. This implies that Israel is determined to keep the West Bank under occupation for another 25 years.

The symposium also discussed several areas related to the Arab gas industry, including Lebanon’s postponement, for domestic reasons, of the first round of tenders and selection of international companies that will explore oil in its waters, especially considering that the neighboring countries have reached the phase of production and are planning to export gas. The delay in Lebanon has raised questions about the oil companies’ continued interest in exploring its waters.

Also, the symposium tackled oil exploration in Syrian waters, knowing that a contract has been recently signed with a Russian oil company. The symposium warned against the dangers and challenges resulting from the delay in delineating the borders of the exclusive economic zone among the Eastern Mediterranean countries, especially since most of the discoveries are located in these particular areas.

A research paper on the Gaza Marine field in Palestinian waters was discussed as Israel has been preventing the development of this field since its discovery in 2000, at a time when electricity consumption is increasing in the Palestinian Authority (PA) territories (Gaza Strip and the West Bank) by about 6% per year.

This will lead to an increase of electrical energy demands and a significant increase of the PA’s electricity and fuel import bill from Israel, which makes it more dependent on it.

Noble Energy made all the discoveries in the Israeli northern waters, in partnership with a small Israeli firm, which placed a huge burden on the companies in the development of the seven fields, including the huge Leviathan field, whose development cost is estimated at nearly $6.5 billion. This has raised two key issues in Israel: the monopoly of Noble Energy of gas supplies to the Israeli domestic market, which angered the Anti-Monopoly Committee.

The latter demanded that Noble Energy sell some of its finds to international companies to break this monopoly. Indeed, Noble Energy negotiated with Russian and Australian firms, without reaching an agreement. Yet, it seems that advanced negotiations are taking place with an Italian firm to buy the Karish field, which is very close to the Lebanese waters, in addition to the adjacent Tanin field, and part of the Leviathan field, which is near them. In case a final agreement is reached, Noble Energy will be able to provide the necessary liquidity to develop the Leviathan field, and to meet the demand of the Anti-Monopoly Committee. This would also mean that the Italian company will go ahead with the development of the Karish field.

The limited Israeli gas exports are facing several challenges. Competition is hard in the Asian markets, as the countries located to the east of the Suez Canal (Qatar, Iran, Indonesia, Australia and Malaysia) and Mozambique have great gas reserves. The US market has become saturated with shale gas. Today, America is planning to export, not to import, which means that there are two potential markets: Europe and the Middle East.

There were many proposals on the export of Israeli gas to Europe; most recently, US Vice President Joe Biden proposed the building of a gas pipeline from Israel, Egypt and Cyprus, via Turkey and Greece, to the European gas network. This proposal has political gains at the same time: isolate Egyptian gas from Arab markets and link it to the Israeli exports. The goals also include the unification of the Republic of Cyprus, and the provision of gas supplies to Europe to halt its dependence on Russian gas.

Gas reserves in the Eastern Mediterranean are not enough to compensate for Russian gas to Europe. Moreover, Turkey under Recep Tayyip Erdogan has agendas and priorities that differ from Washington’s. As for the Middle East market, it is a potential choice for Israel, where there is a fundamental deficit (as in Jordan) or periodic deficit (as in Egypt); Israel is trying to fill the gap and infiltrate into them.

The symposium included a wide debate about gas in Egypt. Questions were raised on the reasons why Egypt shifted from being a gas exporter to an importer in a very short period. It turns out that there is poor planning of the domestic supply and demand, and the lower prices in the domestic market increased consumption and corruption (Egyptian gas to Israel is set at about 70 cents per million British [thermal] units, which is less than the cost of production [others put the price much higher]), while Noble Energy is selling gas to the Israeli market at $5.50 per million British units.

Read more: http://www.al-monitor.com/pulse/business/2014/12/israel-infiltration-energy-sector.html#ixzz3NuvkdUvb

Will Arab countries buy Israel’s natural gas? – Al-Monitor: the Pulse of the Middle East.

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About angelajoya

Assistant Professor, Middle East Political Economy, at the University of Oregon. Currently writing on the Egyptian revolution and the Syrian crisis.
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