Israel must not put all gas export eggs in one basket, industry expert tells Post

By
November 18, 2013 17:24

Dr. Amit Mor, CEO of Eco Energy says Israel should diversify the modes of export for its gas.

4 minute read.



Leviathan holds 453 billion cu.m. of gas.

Leviathan 521. (photo credit: Albatross)

Now that the government has cemented its decision to export much of the nation’s offshore natural gas, the country’s leaders must take care to diversify the modes of export chosen, an industry expert told The Jerusalem Post.

“I am trying to convince the parties that indeed they should not put all [Israel’s] export eggs in one basket,” Dr.

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Amit Mor, CEO of the Herzliya Pituah-based financial and strategic consulting firm Eco Energy, said on Sunday.

The cabinet decided on June 23 that 540 billion cubic meters of Israel’s eastern Mediterranean natural gas must be kept at home, limiting export quantities to 40 percent of the estimate reserves. The High Court of Justice upheld this determination on October 21, after opposition leader Shelly Yacimovich and other colleagues filed a petition demanding that a decision of such financial and social magnitude should be made by the Knesset.

Israel still needs to decide how and to where it will export its gas. To discuss this, Mor will preside over the Israel Energy and Business Convention 2013 this Tuesday and Wednesday at the Kfar Hamaccabiah convention center in Ramat Gan.

“What I’m trying to do is put on the stage, bring to the audience, the participants, the full story as possible – from the upstream, the dilemmas and the various options to exports,” Mor said.

While Mor recommends that the government choose a combination of several export options, he says there are just a few viable choices.

One of the most economically beneficial options would be exporting to Turkey, either through a pipeline or through compressed natural gas (CNG) tankers, he explained.

Israel would find a “thriving Turkish market,” in which the demand for gas is expected to jump from 42 b.cu.m. annually in 2012 to 60 b.cu.m. in 2020, Mor said. Turkey aims to decrease its dependency on Russian gas, and is already importing gas from Iran, with plans to increase imports from Azerbaijan and begin receiving the resource from Turkmenistan, he added.

“There is a major will [to import Israel gas] on behalf of the Turkish private sector,” members of which are already negotiating with Israel’s Leviathan reservoir partners, Mor said.

“The problem in this project is of course political,” he said.

Initially, Turkey would use Israeli gas solely to meet its domestic needs, Mor said.

Later, gas could go through Turkey to Europe, after completion of the Trans-Anatolian Pipeline – running from Azerbaijan through Turkey to Europe, and the Trans-Adriatic Pipeline – slated to connect to the Trans-Anatolian Pipeline and go through Greece, Albania, the Adriatic Sea and then to Italy.

The Trans-Adriatic Pipeline should be delivering gas to southern Europe by the end of the decade, Mor said.

Another idea is to run a pipeline from Israel’s Leviathan reservoir, 130 km.

west of Haifa, to the southern coast of Cyprus, where the Cypriot government plans to build a plant to generate liquefied natural gas. This would be relatively simple, as Houston- based Noble Energy operates drilling sites in the exclusive economic zones of both Israel and Cyprus, Mor explained.

The inclusion of Israeli gas in the LNG facility would help justify the construction of the project for the Cypriot government, as the island nation does not have enough gas of its own to do so, he continued.

From Cyprus, Israeli LNG could be exported to Asian countries, such as China and India.

A third export option for Israel is the Floating LNG (FLNG) system, the first example of which Royal Dutch Shell is developing off Australia. In small, densely populated countries such as Israel, the FLNG option could satisfy members of the “not in my backyard” (“NIMBY”) camp, who would oppose having an onshore LNG processing facility, Mor explained.

“It’s a new technology, but the Israeli project would not be the first,” Mor said, stressing that production costs at offshore LNG facilities will be competitive with those onshore.

“Although there is a need to protect offshore facilities, the advantage here is that we reduce the political risk,” he continued. “The advantage is that there is no need for any bilateral agreements.”

Yet a fourth export option for Israel is to export gas through onshore pipelines in the region, in Jordan, Egypt and the Palestinian Authority.

“Jordan suffered a lot from its dependency on Egyptian gas, which was interrupted [by terrorists in Sinai],” Mor said.

Explaining that Jordan is experiencing a “major economic crisis” and has switched to using fuel oil and diesel, at an additional cost of billions of dollars, he said that pipelines could be constructed to bring gas from the Israeli Tamar and Leviathan reservoirs to Jordan within three years.

“This could be very beneficial to Jordan, because the Israeli gas price is relatively low,” Mor said. “The problem here is again geopolitical in nature. A decision by King Abdullah is necessary.”

Israel will likely supply small amounts of gas to the PA for two natural gas-based power plants that are being planned in the West Bank, Mor added.

The most economical regional solution would be to supply natural gas to Egypt by reversing the flow in the existing infrastructure, according to Mor. Egypt has developed a severe natural gas shortage despite its huge reservoirs, because foreign companies are not investing in exploration there, he explained. Meanwhile, the country’s two LNG liquefaction plants sit idle.

As for which of the export options Israel will choose, Mor said that he is confident that the government “will respond to the request of the developers.”

“The exporting of natural gas from Israel in the east Mediterranean can enhance stability in the region and might bring economic and political cooperation between rivals for the benefit of the people in the region,” he said.


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