Israel branching out

As Israel's natural gas sector leaps forward, National Infrastructure, Energy and Water Minister Yuval Steinitz is determined to see not only one but two pipelines carrying that resource to the shores of Europe. “My idea is that the eastern Mediterranean – the economic waters between Cyprus, Israel and Egypt in the southeast corner of the eastern Mediterranean – will become some kind of replacement for the North Sea,” he told The Jerusalem Post in a an interview last week, ahead of the Jerusalem Post Conference in New York on May 7, where Steinitz will be appearing. After years of bureaucratic squabbles delayed progress in the country's natural gas industry, development is at long last under way at Israel's Leviathan reservoir – a basin expected not only to boost domestic supplies but also to serve as an export outlet to Israel's immediate neighbors and the wider Mediterranean region. With gas expected to flow from Leviathan in 2019, Steinitz is eager to advance plans to build an export pipeline not only to Turkey but also to Italy, via Cyprus and Greece. “I'm going to do both,” he said decisively. The pipeline to Turkey, which would be significantly cheaper and have fewer infrastructural complications, could likely be completed within three years, according to the minister. Since his visit to Turkey last October, Steinitz said that he has already held three rounds of talks on the matter with his Turkish counterpart, Berat Albayrak. “We hope to conclude a government-to-government agreement on a memorandum of understanding between Turkey and Israel this summer,” he said. The 500-km. pipeline to Turkey would need to cross through the exclusive economic zone of Cyprus – a country embroiled in decades of conflict with Turkey, due to the latter's occupation of the northern portion of the island. Building that pipeline is still permissible regardless of Cypriot approval, due to the fact that it would pass through the country's economic waters only, rather than its territorial bounds, Steinitz explained. “So once Leviathan is developed, or shortly after that, Israeli gas will already be supplied to Turkey,” he said. In parallel to his efforts advancing the pipeline to Turkey, the minister is also laying down the groundwork for a future 2,200-km. pipeline connecting Israel's eastern Mediterranean with Italy, via Cyprus and Greece. “This is more ambitious and more complicated and more expensive. This is going to be an unprecedented pipeline – it will be the longest subsea pipeline in the world and also the deepest,” he said, noting that the pipeline would reach 3 km. in depth. A feasibility study conducted by the Italian energy company Edison's Greek subsidiary, Poseidon, provided what Steinitz described as “very encouraging” results – indicating that while no such pipeline has been constructed before, the process would be technologically feasible. In addition, the project would be much less costly than previously estimated, amounting to around $6 billion-$7b., he said. Although both the Cypriot-Greek-Italian and the Turkish pipelines would likely be private sector projects financed by private banks, Steinitz stressed that the relevant governments must “pave the way for this to happen.” Thus far, he said, the European Union is taking his proposal for the second project very seriously. At the moment, the EU receives its gas from two main sources – Russia in the east and the North Sea (Norway, Denmark and Great Britain) in the west, Steinitz explained. “That is the picture,” he said. “The North Sea is on the verge of depletion. Actually, depletion already started in some areas.” It is the minister's wish that eastern Mediterranean gas – predominantly Israeli and Cypriot gas – help fill in that gap by providing the resource to Italy and potentially other EU countries, if further discoveries occur. On Monday, the minister will be hosting a summit in Tel Aviv with his Cypriot, Greek and Italian counterparts, as well as the European commissioner for climate action and energy. At the summit, the initiative will be presented publicly for the first time. “We have here some kind of geographical advantage – our proximity to Europe – and the best way to use this advantage is by building cross-Mediterranean pipelines, to Italy and Greece on one hand, and to Turkey on the other hand,” Steinitz said. “We are not an energy superpower, although we have found very nice gas fields,” he continued. “We are not Russia and not the United States or Canada, and not even Iran or Saudi Arabia. But still, because of depletion of the North Sea and because of problems in Northern Africa, Israel can be a very good and reliable source of natural gas – some kind of replacement for missing gas from the North Sea.” In Steinitz's opinion, reliability could be a key advantage to Israel and Cyprus, as these two OECD-member countries develop their gas resources and initiate export deals. Meanwhile, the subsea pipeline under discussion would be extremely secure due to its depth – so secure that a military submarine would not even be able to reach the infrastructure, he explained. Slightly northward in the eastern Mediterranean, Lebanon is planning a tendering process for gas exploration along its shores. Three of the exploration blocks being included in the process are apparently within a marine territory disputed by Lebanon and Israel, according to a recent Globes report. As a result, Israel asked the US and the United Nations to pressure Lebanon to change the details of the planned tenders, the report said. Addressing these concerns, Steinitz stressed that “there is a little dispute about the economic water limits between Israel and Lebanon,” noting that the area in question involves a distance of only about 7 km. “We already said that we will protect our legal and legitimate rights and what we see as our economic waters, but we also emphasized that we are willing to resolve the differences by means of dialogue,” Steinitz said. “It can be direct or indirect dialogue.” Over the past few years, there has been an American attempt to resolve the issue, Steinitz added, stressing that doing so would be in the interest of both sides. “I want to be optimistic and hope that in the next year or two, with maybe some help from the US, this will be resolved,” he said. As Israel continually looks to strengthen its gas sector and larger energy industry, the government is also focusing on research and development collaborations with the United States. “We have had very good cooperation and collaboration with the United States on energy in the past, and I have had a very good and very positive approach with [former US energy secretary] Prof. Ernest Moniz,” Steinitz said. “But I am confident that it's going to be the same and even improved with [incumbent] Rick Perry.” During the minister's visit to the US in early March, to attend the CERAWeek energy convention in Houston, Perry was officially appointed to the secretary of energy position. “We got a phone call from Washington telling us he would be willing and glad to meet us three days later,” Steinitz said. “We had to change our planes, and instead of going back to Israel after CERAWeek, we flew to Washington and met Rick Perry only two or three days after he was sworn in.” Describing Perry as “extremely friendly and welcoming,” Steinitz said they discussed areas of cooperation like cybersecurity for energy infrastructure, power stations and the electric grid. In addition, the minister said he asked his counterpart to encourage American energy companies to come to Israel. The two officials also spoke about the forthcoming establishment of a US-Israel joint energy research center, and Perry voiced his intention to visit Israel – a trip he previously made as Texas governor several times, Steinitz added. “It was a very good start, a very good kickoff,” he said. “So I'm confident that what we have here is a friendly administration and an extremely friendly and supportive secretary of energy.” While Steinitz sees the export of gas to Turkey, Italy and elsewhere as a critical phase in Israel's natural gas future, he also stressed the importance of the “natural gas revolution” taking place at home. Developing Leviathan – and the much smaller neighboring basins Karish and Tanin – will not only generate some NIS 300b.-NIS 400b. in revenues for the government over the next 25 years, but the gas used can also contribute to cleaning up the environment, he explained. “If we manage to shift our electricity production, our industries and transportation to natural gas, if we manage to make natural gas the main fuel in Israel, then we will create better surroundings, and we will dramatically improve the public health for ourselves, our children and grandchildren,” he said. “This is a real revolution.” In five years from now, Steinitz said, his goal is to see natural gas providing 80% of the country's electricity – in comparison to today's roughly 60% contribution – with renewable energy accounting for 10% instead of today's 2%, and coal dropping from 36% to 10%. Equally crucial is the shift of both industry and heavy transportation to operating on natural gas rather than diesel, he added. In about a decade, he said, he would envision natural gas powering 80% of industry and more than half of the country's buses and trucks. “We are going to use our natural gas resources, and the development of Leviathan and Karish and Tanin, to make Israel a much better place and healthier place to live in,” Steinitz said. Although about 900 billion-1,000 billion cubic meters of gas have been found in Israel's eastern Mediterranean thus far, Steinitz expressed hopes that future explorations would reveal much more. Estimates have indicated that more than 2,000 BCM may be awaiting discovery, and the Energy Ministry has launched a tendering process for companies to come test the waters in 24 new exploration blocks. “It seems that what was discovered so far is just the tip of the iceberg,” he said.

Israel branching out

Energy Minister Yuval Steinitz wants to see Israel become part of a regional hub supplying Turkey and Europe with natural gas.

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Israel branching out

Energy Minister Yuval Steinitz wants to see Israel become part of a regional hub supplying Turkey and Europe with natural gas.

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