For its own sake and for that of the region, Israel cannot remain on its own
concerning energy, an international expert in the field argued on Sunday
“Israel is going through a very important time of understanding
energy markets in the country and in the region,” said Dr. Fatih Birol, chief
economist of the International Energy Agency in Paris. “Israel is not an energy
island. Israel cannot stay an energy island.”
Birol was the keynote
speaker during a panel on “myths and truths” of the global energy arena at the
Israel Business Conference in Tel Aviv. The gathering is organized annually by
the Globes business newspaper.
In an energy world that is “changing very
fast,” countries and companies that desire to remain winners must understand the
new “dynamic position” that characterizes energy markets as new players join the
“energy game,” Birol stressed. In addition, they must recognize the role changes
and even reversals that take place as countries that were once solely resource
importers are becoming exporters.
“Today, the job descriptions of these
players are being rewritten and redefined,” he said, presenting the findings of
his agency’s Word Energy Outlook 2013.
The United States and Brazil,
solely energy importers for so many years, are suddenly becoming energy
exporters, he said, while former Middle Eastern oil superpowers now play the
role of consumer.
Despite the fact that the US is experiencing an
unprecedented petroleum boom, the Middle East will maintain a significant place
in the worldwide oil market, Birol stressed, adding that “there will be an iron
trade link between the Middle East and Asia.”
Nevertheless, the US will
likely be the largest oil producer in the world by 2015 owing to its oil
deposits in shale rock, although most of that oil will be sold exclusively for
domestic consumption, he explained.
“The Middle East is and will remain
critical to the global oil market despite what is happening in the United
States,” he said. “I believe that it is not right to say that what happened in
the United States makes the Middle East an unimportant player. We will need
Middle East oil to match the growth in Asia.”
Non-OECD Asian countries
will contribute to 65 percent of the global growth in demand for energy
resources by the year 2035, Birol said.
Dr. Edward Lewis Morse, global
head of commodities research at Citigroup in New York, told panel participants
that the development of unconventional energy resources had become “a
phenomenally disruptive challenge.”
In the changing energy scenario, in
which new players had appeared, “OPEC is really a hopeless organization,” Morse
By this time next year, he expected the US to become the largest
net exporter of petroleum products, with major potential for the country to grow
as an energy superpower. Meanwhile, he stressed, it would be crucial for both
the US and Israel to transition from oil to natural gas in the transportation
“Because of the abundance of gas and the abundance of tight and
unconventional deep-water oil, I have a more optimistic view of our energy
future than our other speakers do,” he said.
Keith Elliot, senior vice
president for the eastern Mediterranean for Noble Energy, said Israel, like the
US, had the potential to play a role in the global energy arena as an exporter,
an option providing “mutual benefit to this entire region.”
Noble is the largest stakeholder in Israel’s 282-billion-cubicmeter Tamar
reservoir, which came online in March, as well as in the country’s Leviathan
basin, estimated to be twice as big and slated to be connected in
Emphasizing that “projects like Tamar are challenging,” Elliot said
his company had taken many lessons from that project in order to gauge how the
development of Leviathan would impact its business.
With Tamar, for
example, Noble and its partners “have experienced government intervention in our
two contracts, which has created some fiscal uncertainty for us,” he
Leviathan, according to Elliot, will be developed in multiple
phases, first as for domestic supply, similar to Tamar, and later as a major
component for export, both regionally through pipelines and farther afield as
liquefied natural gas.
Thus far, he said, Noble had invested $800 million
in Leviathan’s development and expected total development and production costs
to exceed $8 billion.
The reservoir’s 2017 start-date constitutes an
approximately one-year delay, which he attributed to the lengthy government
process of establishing export policies and then transforming these policies
into usable rules and guidelines.
In addition, Noble has been
encountering “some unanticipated antitrust challenges” regarding its role in the
eastern Mediterranean off Israel, which he was confident would be
“For us, we need an environment that supports and encourages
investment, and that’s what we’re working to craft,” he said.
challenges and delays, Elliot stressed that he was optimistic about Israel’s
future as an energy producer and exporter, adding that his company was committed
to working in collaboration with the government.
“We see the development
of Leviathan to be equally critical to the state as the development of Tamar,
perhaps even more so,” he said. “The development of Leviathan is something that
goes beyond just providing fuel to Israel. Leviathan can provide fuel to
regional players [and] neighboring countries.”