An offshore natural gas rig in the Mediterranean Sea.
(photo credit: GUSTAV NACARINO / REUTERS)
Celebration is in order after Delek, Noble Energy and a number of other operators of the Tamar and Leviathan natural-gas fields off Israel’s coast signed a $15 billion deal with an Egyptian consortium called Dolphinus.
Dolphinus will buy 64 billion cubic meters of natural gas from Delek Drilling and its US partner Noble during a 10-year period. It is Israel’s biggest export gas deal to date.
Skeptics warned that the Israeli and foreign business concerns that invested billions of dollars to get the gas out of the fields deep under the Mediterranean off Israel’s shore and into the pipes that generate electricity, would never succeed in exporting in big quantities.
The claim was that no Arab neighbor would be willing to enter into an agreement with Israel.
The Egyptian deal is proof the naysayers were wrong.
As soon as a proper pipeline is set up (a number of options are being weighed) the Israeli gas will be transferred to Egypt where it will be liquefied and exported to Europe and other destinations.
The deal is good for Israel on a number of levels.
Geopolitically, it fortifies commercial ties with Egypt, a country that has maintained only a cold peace. The high-profile deal could help to further normalize relations as it would provide an example of how it is possible to do business with the Jewish state. Egyptians will, one hopes, grow accustomed to the idea.
The deal is the second that Israel has signed with an Arab neighbor, the first being with the Jordan Electric Power Company back in 2016. Now two Arab countries that share borders with Israel are engaged in multi-billion-dollar deals with the Jewish state. They have shared interests as well as an appreciation of Israel’s contribution to their own well-being.
Delek and Noble representatives from Israel travel to Cairo and Amman on a regular basis. Additional export deals are reportedly in the offing with Greece, Turkey, Bulgaria and Cyprus.
By expanding the export market beyond Jordan, the Egyptian sale provides Delek and Noble with additional revenues that will enable them to develop Leviathan, which still has not begun producing.
The more gas Israel has at its disposal, the less it will use of coal and other fuels that pollute. And this will have important health benefits for Israelis.
The deal will also benefit Israel by providing Israeli citizens with additional tax revenues.
Prime Minister Benjamin Netanyahu noted that the added revenue from taxes will “benefit the education, health and welfare of Israeli citizens.”
Skeptics have claimed that exporting gas will mean that less is left for Israel. However, according to criteria set down by the government and the regulators, less than half of the approximately 1,000 billion cubic meters of gas presently thought to be in Israel’s reserves is slated for export. Assuming Israel uses about 10 bcm of gas a year (that was the amount used last year) Israel has enough gas to provide its needs for about 50 years, even if no new reserves are discovered.
According to National Infrastructure, Energy and Water Minister Yuval Steinitz, the OECD recommendation is that no more than 20 years’ worth of gas reserves should be earmarked for domestic consumption.
Once upon a time, Israel was known for its lack of natural resources. It was Israel that bought natural gas from Egypt. The old Jewish joke that Moses took a wrong turn and ended up in the only corner of the Middle East without oil still rang true.
Today Israel is a natural gas power with enough for domestic needs and some left over to export. As the rabbis warned in the Ethics of the Fathers, however, whoever adds wealth, adds worries. Within Israel there is much debate over how to fairly share the wealth. Discovery of gas off Israel’s coast has also led to territorial disputes with Lebanon and Turkey. And building pipelines that will not be sabotaged by Israel’s many enemies is also a major concern.
With all the difficulties, the gas that was discovered is a blessing that has important implications both domestically and internationally. The signing of the Egyptian deal is an occasion for celebration.