The natural gas that Israel is leaving in the ground

DIPLOMATIC AFFAIRS: Cyprus’s president had planned to come to Israel next week. While the trip is off for now, the countries remain at a stalemate over the development of the Aphrodite-Yishai field.

PRIME MINISTER Benjamin Netanyahu meets with Cyprus President Nicos Anastasiades in Jerusalem in 2016. When the two meet again, the cross-border gas field known in Israel as Yishai, and in Cyprus as Aphrodite, will surely be on the agenda. (photo credit: KOBI GIDEON/GPO)
PRIME MINISTER Benjamin Netanyahu meets with Cyprus President Nicos Anastasiades in Jerusalem in 2016. When the two meet again, the cross-border gas field known in Israel as Yishai, and in Cyprus as Aphrodite, will surely be on the agenda.
(photo credit: KOBI GIDEON/GPO)
It was a message Prime Minister Benjamin Netanyahu repeated over and over again in his election campaigns this year and last: The Left wanted to leave the gas in the ground, but he fought to have it drilled and exported to bring money into Israel’s coffers for the welfare of its citizens.
Netanyahu felt so strongly about this that when a unity government was formed, he insisted that the Likud retain the Energy Ministry and Environmental Protection Ministry to ensure that Blue and White would not obstruct continued natural gas drilling in the Mediterranean Sea.
But there is still a fairly significant amount of gas that the government is leaving in the ground, and has been dragging its heels on moving toward getting it out.
That would be the cross-border gas field known in Israel as Yishai, and in Cyprus as Aphrodite, which has been a matter of dispute between the countries in recent years.
In 2010, the year that Cyprus began exploring what is now known as the Aphrodite reservoir, it signed an agreement with Israel settling its exclusive economic zone (EEZ) in areas of the Mediterranean Sea between the countries. The agreement included an article that stipulated that “in case there are natural resources, including hydrocarbons reservoirs, extending from the EEZ of one party to the EEZ of the other, the two parties shall cooperate in order to reach a framework unitization agreement on the modalities of the joint development and exploration of such resources.” If they cannot reach a unitization agreement through diplomatic channels, the agreement says, “the dispute will be referred to arbitration.”
Israel Opportunity, a gas and oil exploration company, began drilling near Aphrodite in 2012, investing $100m. in the effort, to see if parts of the Cypriot reservoir spans into Israeli economic waters, and found that about 10% is, in fact, in Israel.
The Energy Ministry estimates the Israeli part of the reservoir as having 10-12 billion cubic meters of natural gas. It’s much smaller than the Leviathan gas field, which has an estimated 605 bcm, but could still net Israel’s government about NIS 5 billion in royalties and taxes, according to a study by economist Dr. Yehoshua Hoffer ordered by Israel Opportunity and AGR/Nammax, which have the license to operate the field.
Meanwhile, Israel and Cyprus have been in ongoing negotiations and disputes over the rights to drill in Aphrodite-Yishai.
Despite the stalemate between the sides, the Aphrodite partners – Delek and Noble Energy, the partnership that is a majority stakeholder in Israel’s Leviathan gas field and holds nearly half of the Tamar reservoir, together with Royal Shell – started moving forward. They prepared a plan for Aphrodite’s development, sale of gas in Cyprus and export to Egypt, and submitted it to the government of Cyprus.
In November 2019, the three stakeholders signed a 25-year agreement with Cyprus allowing them to develop and sell gas from Aphrodite.
The following month, Energy Ministry director-general Udi Adiri protested the move in a letter to the partner companies, saying they may not develop the reservoir until Israel and Cyprus reach an agreement.
But Cyprus saw things differently, with its Energy Minister Yiorgos Lakkotrypis saying: “The development of Aphrodite and the procedure for a special agreement are not linked, as far as the Cypriot side is concerned.... Our position is crystal clear, and it is as follows. Either with or without an agreement, if it is proven that natural gas from Israel’s side is pumped by our side, the Republic of Cyprus will, of course, compensate the Israeli side accordingly.”
Natural gas fields don’t know where countries draw maritime borders, which means that Aphrodite and Yishai are one and the same. If the Aphrodite partnership begins pumping gas before there’s an agreement, then that means gas on Israel’s side will be pumped as well, with Cyprus getting all of the economic benefit and Israel getting none.
Or as the Energy Ministry put it in 2017: “The Yishai reservoir is geologically an integral part of the Aphrodite reservoir, which includes 125 bcm, such that pumping gas from Aphrodite will necessarily lead to gas being pumped from the Yishai reservoir without a need for separate gas drilling.”
Meanwhile, Cyprus continued signing agreements with the Aphrodite partners, who have been working toward an export agreement with Egypt, while Yishai is listed as “Status – Development on hold” on the Israeli Energy Ministry’s website.
Israeli government officials have talked a lot about developing Yishai, but do not seem to have taken much action.
“The government of Israel cannot give up, not even as a gesture of friendship, on its territories or its natural resources,” Energy Minister Yuval Steinitz said in May 2018.
At that time, Netanyahu said that a professional arbitrator would be brought in if there was no resolution within six months. Over two years later, that process has yet to begin.
Other than letters, there has been little movement since then. Documents provided in the framework of a February 2020 Freedom of Information request from Yishai’s holding companies provide no indication of further efforts.
In fact, the Energy Ministry told The Jerusalem Post this month that the situation has not changed.
“The Energy Ministry together with the relevant factors continue discussing the matter with the Cypriot Energy Ministry while protecting Israel’s interests in the reservoir,” a ministry spokeswoman said. “The Israeli companies with holdings in Yishai are aware of what the ministry is doing and know the fact that until there is an agreement between the two countries, Israel and Cyprus cannot develop the reservoir unilaterally.”
Nammax director Ohad Schwartz called the situation “diplomatic negligence by Israel facing Cyprus. Israel is failing to exercise its rights. It doesn’t make sense that Israel is doing nothing while Cyprus is advancing” Aphrodite’s development.
“Negotiations that take six years are not really negotiations,” he argued. “Is Israel so afraid of Cyprus? Cyprus asks Israel for help all the time in dealing with security threats from Turkey. Israel is strong, but it gave up.”
The question remains why Israel has not actually turned to arbitration or is not putting more public pressure on Cyprus to reach an agreement to develop Aphrodite-Yishai, to – as Netanyahu has often said – get the gas out of the ground for the benefit of Israel’s citizens.