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Israel is becoming energy independent

  • gas
There is a joke that asks why didn’t Moses go right to the oil fields instead of left to the olive groves. The answer is that being a man, he refused to ask for directions. This could explain why some 60 per cent of the world’s oil reserves are found in the Middle East, but none of them exist in Israel.
by PAULA SLIER | Jun 29, 2017

But jokes aside, it means that for decades Israel has been forced to rely on foreign sources of energy and suffers from the vulnerability that comes with that.

A case in point is when the Arab Spring in Egypt erupted in 2011 and Cairo curtailed its exports of natural gas to Israel because of energy shortages at home. Those supplies are not expected to resume any time soon, especially in light of Egypt’s announcement that it was indefinitely suspending its gas supply agreement with Jerusalem.

But in the end, it seems Moses might not have been so off the mark. There’s a lot of excitement in Israeli financial circles that recent natural gas discoveries off the country’s coasts could be a game changer.

Nearly 20 years ago two small natural gas fields were found off the beaches of Ashkelon and then in 2009 and 2010 significantly larger ones were discovered in the waters off Haifa. They are among the largest offshore fields in the world.

Natural gas is fast becoming a popular alternative to oil or coal. It can produce about 20 per cent more electricity than oil or coal and is more environmentally friendly. Currently in Israel, 60 per cent of the country’s electricity derives from natural gas. The goal is to reach 80 per cent.

Challenges aside, these discoveries offer Israel a level of energy independence it has never known. Not only does the country now stand to become more energy independent, but it could also become a major gas exporter. Prime Minister Benjamin Netanyahu has repeatedly said hundreds of billions of dollars will find their way into Israeli coffers, to in turn be used for welfare, health and education.

But most importantly, the new gas fields will make Israel a global energy player for the first time in its history, greatly altering its political and economic clout throughout the world, especially Europe.

Already the world’s longest underwater pipeline that would carry gas from Israel to Cyprus, Greece and Italy, to the tune of six-and-a-half billion dollars, is in the works. This would bring Israel’s natural gas into the European market and has the support of the EU’s Climate and Energy Commission.

It says it would help limit Europe’s reliance on Russian-supplied gas. Moscow in the past has used its large reserves to play politics. After a pricing dispute with Ukraine, Moscow cut off gas exports to Europe, prompting The New York Times a few years ago to run with the headline: “Russia Cuts Gas, and Europe Shivers”.

Jordan has already signed a $15 billion, 15-year letter of intent to import Israeli natural gas, the first quantities of which were sent earlier this year. While less desirable to the Kingdom from a political point of view, such an agreement represents the most expedient and least costly option for Jordan to compensate for its loss of Egyptian gas.

And it’s still not so unforeseeable that Cairo itself may someday obtain natural gas from Israel, though so far Egypt has rejected such deals on political grounds.

But there are challenges. At the moment, a single pipe connects the one gas field, Tamar, to the Israeli shore. Should a technical problem arise or a Hamas or Hezbollah missile hit it, those on the receiving end would be in darkness. It also costs billions of dollars to develop these offshore fields and there have been problems over regulation in the past.

At the moment two main companies control the drillings, with critics arguing they will be able to impose exorbitant prices. The Israeli and Palestinian markets are relatively small and if Europe doesn’t materialise as a major buyer, it will be difficult to interest more companies in financing further exploration. At the moment, there is also an oversupply of gas and prices are low.

But exciting for Israel is the geopolitical implications. Of course, some countries will never buy Israeli gas, but those who do, like countries in Europe, might land up becoming more lenient towards Israeli policies.

The question of course remains whether or not this new political clout will lead governments to back away from their support of the BDS (Boycott, Disinvestment and Sanctions) movement and criticism of the Jewish State. But even if it doesn’t, when you do the maths, the promise of these new discoveries does seem to make Moses’ wanderings that little more successful. 

Paula Slier is the Middle East Bureau Chief of RT, the founder and CEO of NewshoundMedia and the inaugural winner of the Europcar Woman in Leadership Award of the South African Absa Jewish Achievers.

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