Pipeline blast prompts calls to speed gas development

IEC can manage without Egyptian supplies for 2 weeks, new Israeli natural gas reserves can't be utilized until at least 2013.

February 7, 2011 02:22
4 minute read.
Gas pipeline explosion in El-Arish, Egypt

Gas Pipeline Blast 311. (photo credit: Associated Press)


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The explosion of an Egyptian gas terminal would not immediately influence local fuel supplies, but Israel must explore alternative power sources in earnest if it hopes to assure energy independence, Israeli officials warned on Sunday.

With Egypt in its second week of mass anti-government protests, Prime Minister Binyamin Netanyahu said the government had been prepared for the possible disruption of Egyptian supplies and arranged for other sources to compensate.

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“Because of these advance preparations, no disruptions in the gas supply to Israel are expected,” he told the cabinet.

Saturday’s blast at the facility in the northern Sinai set off a massive fire that was contained by shutting off the flow of gas to Jordan and Israel. Egypt’s natural gas company said the fire had been caused by a gas leak, but local officials said a bomb had been detonated inside the terminal.

Officials said the incident illustrated the risk Israel faces in relying on Egypt as a key energy supplier. While coal has historically been the dominant fuel source for Israeli electricity plants, the country shifted its reliance extensively to Egypt, which, under a 15-year deal signed in 2008, is to sell Israel 1.7 billion cubic meters of gas a year.

Israeli industry analysts see that flow as important to diversifying the country’s fuel sources and to maintaining good ties with Egypt.

Dr. Amit Mor, CEO of the Herzliya Pituah-based consulting and investment firm Eco Energy Ltd., told The Jerusalem Post on Sunday that Israel had to ensure its energy independence in the face of possible technical failures and commercial or strategic instability.

Mor said Israel should invest in developing its infrastructure for transporting and using liquefied natural gas, or LNG – gas that has been converted to liquid form for ease of transport and storage.

National Infrastructures Minister Uzi Landau said on Sunday that Israel would work to build a floating platform off the Mediterranean coast to receive LNG and transport it to shore.

“We must build this platform off Hadera in the next two years because there is an emergency that we need to take into account,” Landau told Israel Radio, referring to the Egyptian uprising. LNG can be more easily stockpiled for emergency situations than other forms of natural gas.

Gas exploration companies have announced two deep-water finds over the past two years in Israeli territorial waters totaling some 25 trillion cubic meters. While that amount dwarfs the quantity Egypt has contracted to sell Israel, gas is not expected to start flowing from one of those fields, Tamar, before 2013.

“Playing with gas is playing with fire,” MK Carmel Shama- Hacohen, chairman of the Knesset Economic Affairs Committee, said during a hearing on Sunday, according to Globes.

“Israel’s energy economy must take into account a scenario of no gas deliveries from Egypt.” The committee convened a special meeting to discuss the effect of the unrest in Egypt on the Israeli energy market.

Israel Electric Corp., the nation’s largest natural gas user, can weather the shut-off without disruption for up to two weeks, CEO Amos Lasker told Israel Radio. Should it drag on beyond that, the country would be forced to use pricier fuels, he said.

Landau said he wants the government to back loans so financing can be obtained to develop the Tamar field roughly 80 km. west of Haifa, a spokesman said.

The infrastructure minister also favors exempting the field’s developers from a proposed windfall tax to encourage them to get moving.

“We have to do everything to improve Israel’s energy security,” the minister said. “It is Israel’s obligation to remove as soon as possible every obstacle” to developing Tamar.

Landau’s spokesman said the goal was to have gas from Tamar flowing into Israel by 2013, adding that the Sinai explosion “just proves” the need to do so.

“We want energy independence and to achieve it as soon as possible,” the spokesman said.

Various obstacles have held up the development of Tamar. The gas companies planning to work the field are lobbying the government not to apply a proposed windfall tax retroactively to their find.

The companies’ prospective lenders also want the state to guarantee the loans to make sure the IEC honors its commitment to buy the gas.

Ratings firm Standard & Poor’s recently downgraded the utility’s credit rating to junk status.

The new discoveries – which Beirut says, without providing proof, lie partly in Lebanese waters – are enough to keep Israel energy self-sufficient for decades, Israeli experts say, and could potentially turn the country into an energy exporter.

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