Despite Turkey-Israel accord, gas deal complex

National Infrastructure, Energy and Water Minister Yuval Steinitz welcomed the agreement, saying it was a sign the two countries had chosen “the way of peace.”

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June 28, 2016 23:42
3 minute read.
Israel Turkey

Israel and Turkey flags. (photo credit: Courtesy)

 
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The deal signed by Israel and Turkey on Tuesday to restore ties is believed to pave the way for a possible gas deal, however logistical, political and financial obstacles could mean such a project is still a long way off, if at all doable.

National Infrastructure, Energy and Water Minister Yuval Steinitz welcomed the agreement, saying it was a sign the two countries had chosen “the way of peace.”

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He said the deal “will continue the development of Israel’s natural gas market as well as the possibilities of finding and developing more gas fields beyond Leviathan.”

Meanwhile, Yossi Abu, CEO OF Delek Drilling, which owns a 22.6 percent share in Leviathan, said Tuesday he was closely following “recent developments” with Turkey, saying they could “help promote bilateral cooperation in the field of natural gas.”

He called the Turkish market “substantial... along with Jordan and Egypt.” He added that the country is also a connection to the European market Zionist Union MK Yael Cohen Paran questioned whether Prime Minister Benjamin Netanyahu would have reconciled with Turkey if not for “pressure from the gas companies and business magnate Yitzhak Tshuva. Though she is very much in favor of an agreement with Turkey, she opposes this one, which is “written by the gas companies.”

The MK also charged that the agreement was reached “for the sake of Tshuva and Noble Energy so they can move ahead with exporting natural gas to Turkey.”

Netanyahu is only concerned with “stealing Israel’s natural resources,” Cohen Paran chided, rather than negotiating for the remains of kidnapped soldiers.

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Yossi Dorfman, who heads the natural gas campaign for environmental NGO Green Course, countered claims he attributed to Netanyahu that Israel could be a gas superpower, with plenty to spare for exports.

“It’s amazing how much the prime minister cares about gas for the Turks and Europeans instead of developing the Israeli market.”

Amir Foster, an energy consultant, told The Jerusalem Post that from an engineering prospective, it is doable, but first Turkish and Israeli companies would need to agree on the commercial conditions.

He has heard that talks between Cyprus and Turkey occupied Northern Cyprus are advancing, which would allow the plan to build a pipeline to Turkey to go forward. “A deal to build a pipeline to Turkey would benefit everyone.”

The diplomatic deal between Israel and Turkey overcame a major obstacle and now talks can move forward, added Foster.

A veteran senior energy analyst in Israel, who did not want to be identified, told the Post that large projects of the size of a prospective gas pipeline to Turkey would require lots of financing from institutions that would seek to guarantee future profit.

“It is an economic question. If it can be financed and institutions feel secure they would get their money back with profits,” then the project will go forward, he said.

A pipeline to Turkey would be “very risky,” he said, though noted that some financiers have a higher appetite for risk.

Asked about the possibility of a pipeline bypassing Turkey and going through Cyprus to Greece, the source responded that everyone he has spoken to about this says it must go to Turkey, and that Greece is not a possibility.

Questioned about the possibility of using Liquefied Natural Gas, he said this had been talked about back in 2011-2012, but ever since the potential farm-in of Woodside to Leviathan was abandoned all talk of LNG has disappeared.

On the political obstacles to advancing a gas deal with Turkey, Prof. Efraim Inbar, director of Bar-Ilan University’s Begin-Sadat Center for Strategic Studies, told the Post, “I am not happy with the deal because it implies gas sales to Turkey, which strengthens the Erdogan regime – supporters of the Muslim Brotherhood and Hamas.”

“Moreover, by building a pipeline to Turkey via Cyprus we would become Turkey’s hostages.”

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