We are now witnessing a transformation of the energy landscape of Israel. In the
short term, Israel is actually suffering from an energy shortage. Warnings of
blackouts and higher electricity rates are the result of recent attacks on the
natural gas pipeline between Egypt and Israel, as well as the unexpected decline
in production from Israel’s sole existing domestic off-shore gas site, known as
the Mary B field.
Notwithstanding the current energy crunch, Israel is
poised to become energy independent and a net energy exporter within this decade
in light of significant discoveries of both off-shore natural gas reserves and
onshore deposits of shale oil.
Some quick statistics: The Tamar,
Leviathan and Tanin 1 natural gas fields, located off the coast of Haifa,
together account for around 730 billion cubic meters of gas. Israel consumes
only 3.25 billion cubic meters of gas per year, so these reserves will
eventually negate the need to import natural gas and potentially allow for
exporting large quantities of this energy source (experts estimate approximately
$3 billion a year in added revenue).
Furthermore, these discoveries will
drastically reduce the need to import coal – a CO2 emitting fossil fuel Israel
currently relies on to generate 40 percent of its electricity.
deposits deep under the surface of Israel could potentially dwarf these abundant
natural gas discoveries.
Exploration conducted by Israel Energy
Initiatives (IEI), revealed that Israel could be sitting on vast shale oil
reserves, approximately 250 billion barrels of oil, third only to the United
States and perhaps China. Comparatively, Saudi Arabia has proven reserves of
about 260 billion barrels. Israel consumes around 100 million barrels of oil a
year (imported mostly from Russia and former Soviet states), accounting for
around 50% of its primary energy consumption. If IEI’s bold project comes to
fruition, by 2020, Israel could be extracting some 50,000 barrels per day (bpd),
around 1/6th of its daily imports at 282,000 bpd.
While these discoveries
– especially with respect to the shale oil – present profound environmental,
health, security, feasibility and cost hurdles, large energy consuming states
such as China and India have already begun to court Israel in an effort to
diversify their energy portfolios and meet the growing energy demands of their
economies. Israel, for its part, has responded to Asian overtures with a bold
plan, approved unanimously this week by the Israeli cabinet, to build the first
railway between its Mediterranean and Red Sea coasts. This so-called “Med-Red”
railway would create an alternative to Egypt’s Suez Canal, effectively creating
a new land bridge between Europe and Asia. This concept is especially attractive
given Egypt’s current instability and opaque future, as well as the possible
closure of the Straits of Hormuz.
For Israel, it’s not only about the
billions of dollars in additional revenue – the strategic value of hosting such
a vital commercial route is just as, if not more, significant.
signaled a willingness to invest in the Med-Red project. With this intertwining
of the Chinese and Israeli economies, we may see a shift of Chinese policy in
the Middle East – a more balanced diplomacy that takes into account not only
China’s Gulf and Iranian interests, but those of Israel as well. Such a policy
shift could have repercussions on the UN Security Council – where critical
Chinese votes against Israeli interests have become the norm rather than the
Energy security, new revenue streams, and the upgrade of
relations with emerging global powers such as China and India couldn’t come at a
better time for Israel. The traditional list of allies of Israel has grown thin
– a consequence of the Arab Spring, strategic policy shifts in Turkey, and
growing resentment within Europe over perceived obstructionism by the
As Israel’s economy grows due to these energy
sector discoveries, so too will its resilience to anti-Israel efforts such as
the Boycott, Divestment and Sanction (BDS) campaign.
As for the United
States, the historic interlocutor for peace in the Middle East, financial and
security interests dictate a continued presence in the region for the
foreseeable future. However, the United States has its own energy independence
goals, as stated most recently in President Barack Obama’s State of the Union
Address where he emphatically called for an “American-made energy” industry. As
America invests in its own oil, natural gas and shale reserves, it will become
less dependent on Middle East oil. In fact, it’s already happening: President
Obama declared that last year the US relied less on foreign oil than in any of
the past 16 years.
The American public, not to mention the US Treasury,
is drained from two long wars in Iraq and Afghanistan.
As we have seen in
Libya and with the inclusion of the Middle East Quartet in Israeli-Palestinian
negotiations, the United States is becoming more comfortable “leading from
behind,” receding somewhat from its previously dominant position in order to get
its financial house in order. As incentives decrease for costly Middle- Eastern
entanglements, the US-Israel alliance could see a waning as well.
US eventually retreats from the forefront of the Arab-Israeli conflict, it seems
China is situated to fill that void. China is a vocal supporter of the two-state
solution, but maintains “pro-Palestinian” positions with respect to east
Jerusalem, Israeli settlement expansion and Palestine’s UN membership bid. These
positions, while controversial, would help energize the perpetually stalled
peace talks. American failures to broker a peace deal have been blamed by some
on its inability to neutrally arbitrate and its unwillingness to put the
appropriate pressure on its ally Israel. A Chinese-led effort would ameliorate
these concerns and give the peace process a much needed fresh start. Also, China
has far more influence over Iran than does the US (China-Iran trade is a booming
$45 billion), so any Chinese- brokered peace deal would likely be more
comprehensive than anything the US could offer – a boon to
However great the economic impact of Israel’s energy sector
transformation will be, the interdependent geopolitical consequences look even
more astonishing.Nicholas Saidel received his law degree from Georgetown
University and his Master’s Degree in Islamic and Middle Eastern Studies from
the Hebrew University of Jerusalem. He is associate director of the Institute
for Strategic Threat Analysis & Response (ISTAR) at the University of
Pennsylvania. Harvey Rubin, M.D., PhD., is a Professor of Medicine and
Computer Science at the University of Pennsylvania and founder and director of
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