'Need for further US-Israel hydrocarbon cooperation'

US Chamber of Commerce Executive Vice President says "energy dynamic that has shaped the Middle East now opens opportunities for Israel."

By SHARON UDASIN
LEVIATHAN’S in-pipe turbine system hydro-electric 311 (photo credit: Leviathan Energy)
LEVIATHAN’S in-pipe turbine system hydro-electric 311
(photo credit: Leviathan Energy)
Due to the US’s wealth of experience in harnessing energy from the hydrocarbons found within its borders, Israel should be making use of its partner’s knowledge while creating policies for its own emerging natural gas sector, the US Chamber of Commerce has recommended.
“The energy dynamic that has shaped the Middle East region and the world for decades now opens opportunities for Israel to be more prosperous and secure than at any point since her founding,” US Chamber of Commerce Executive Vice President and head of International Affairs Myron Brilliant wrote in a letter to Prime Minister Binymain Netanyahu on Friday.
Brilliant sent the letter to Netanyahu along with a detailed, 12-page memo as to how the two countries can advance their cooperation in energy exploration and production, a move that can be a “catalyst” for elevating overall commercial bonds.
While “unprecedented US-Israel commercial cooperation” has already taken root in the hydrocarbons sector, to maintain that level of collaboration, Israel must establish stable, supportive and transparent policies and regulations for handling its gas, the Chamber of Commerce official stressed.
“The United States and Israel enjoy a special relationship – one grounded in widely shared values and strategic interests – and Israel’s nascent hydrocarbon sector offers an exciting new vista for deepening this relationship, given the United States’ deep experience in the sector,” Brilliant wrote.
Only two weeks ago, Canadian Natural Resources Minister Joe Oliver visited Israel with similar sentiments for furthering Canada and Israel’s cooperation on the same subject.
Oliver made a call for project proposals under a $5 million Canada-Israel Energy Science and Technology Fund that he and then-energy and water minister Uzi Landau established in October.
Because the US has recently benefited from significantly increased natural gas discoveries, the country is able to offer Israel guidance on developing its own policies going forward.
The benefits of the sector can be maximized when the government monitors rather than dictates market forces, and excessive regulation can threaten the economic, security and environmental goals of the government, the Chamber of Commerce memo warned.
However, environmental safeguards that are rooted in science will ensure proper protection of the resources, the memo said.
Also critical to developing the sector is an export policy grounded in certainty, according to the Chamber of Commerce. An unstable export program “can paralyze energy sector activity,” and sufficient policy clarity for the future is vital for producers to make informed investment and production decisions, the memo said.
Because energy trade is very expensive and requires long contracts, predictability must be assured, and the economic benefits that Israel can reap from allowing exports would be substantial.
Developing an export policy has been particularly controversial in Israel over the past year. The offshore Tamar reservoir that is already flowing into Israel contains 250 billion cubic meters of gas for domestic purposes, and its neighboring, more than double-sized Leviathan is expected to be allocated partially for export and partially for home use.
While the Zemach Committee – headed by Energy and Water Ministry director-general Shaul Zemach – recommended a maximum of 500 billion cubic meters be permitted for export, environmentalists have slammed this figure as too generous.
“The Tzemach Committee’s recommendations would provide an excellent foundation and, if adopted, incentivize greater participation by international oil and natural gas companies in the Israeli market,” the Chamber of Commerce memo said.
The competition developed from adopting such policies would allow for maximization of offshore reserves while providing for domestic demands and generating vital revenue from export, the memo argued.
In addition to providing certainty in its export market, Israel also must ensure that there is redundancy in transmitting the gas to the country’s pipelines – as currently only one reception facility exists for Tamar, the Chamber of Commerce noted. Despite the fact that environmentalists and residents have argued against a northern reception facility in their backyards, the government must assure the private suppliers that there will be additional entry points, the memo explained.
As Israel goes forward with its hydrocarbon future, the country also must revamp its archaic Petroleum Law of 1952, which does not meet the needs of modern production, the Chamber of Commerce said.
The government can remedy this situation by passing a single reform package with comprehensive legislation that will allow for modern regulatory framework and provide stability to the natural gas sector.
Critical to that regulatory framework will be a streamlined environment that does not force investors and stakeholders to contend with so many different regulatory bodies, the memo said.
Because the US boasts a wealth of experience in exploring and extracting hydrocarbons, there are specific examples of ways America and Israel can cooperate on the latter’s energy development going forward, according to the Chamber of Commerce. For instance, the two could work on protecting energy infrastructure from physical and cyber attacks by directing existing homeland security cooperation efforts between the two countries into the energy sector, the memo said. Meanwhile, the US can help Israel formalize its maritime borders against challenges from Lebanon, in order to forestall disputes that could hinder gas production, the memo added.
Another worthwhile idea could be for a US non-government organization such as the American Petroleum Institute to open up an Israel office, to help the country develop its industry standards, the Chamber of Commerce said. Continued bilateral conferences and joint educational programs between the two nations would also be beneficial, as well as expanded cooperative research and development funds, the memo explained.
“In creating a favorable business environment, Israel can attract the world’s leading companies and thereby pave the way for continued progress in executing responsible and growing hydrocarbon development,” the Chamber of Commerce said.
In his own letter, Brilliant informed the prime minister that he would be visiting Israel on May 19 and 20 to discuss these issues in further detail, and he invited Netanyahu to conduct a meeting with him.
“Energy security is a strategic priority for both of our countries – and one that promises to expand our strategic choices in a challenging world,” Brilliant wrote. “The Chamber looks forward to expanding our partnership with Israel in this sector, with this memo, and the broader commitment it signifies.”