It is a little startling just how fast this gas is getting to market.
It also establishes a major trade opportunity for Turkey. Pumping
gas to Europe in competition with Russia is desirable. Pumping it
from Israel is both ironic and a sharp rebuke to the local political
dispensation. There are huge amounts of gas in Iraq and Iran that
could also feed this pipeline.
Perhaps the opportunity to actually profit will focus folk's
attention? We can hope.
In the meantime, the economic posture of Israel will steadily improve
making them the natural Hegemon in the Middle East. At the same
time, neither Egypt nor Syria can mount a creditable military assault
on the borders of Israel. Syria because it is now fully engaged in a
long civil war in which the only outcome will be a rump Alawite state
isolated from Israel but with most of the conventional army and the
successor state with a citizen's militia for defense. Egypt has a
conventional army totally tied to an American tail that effectively
and intentionally grounds any such aspirations. In either case it
will take money that is nonexistent and years of building, all in the
face of dire national needs.
In fact the Copts and Muslims in Egypt are actually sorting
themselves out and heading to an inevitable compromise that precludes
any military adventures.
Once the gas starts flowing, Turkish influence along the Levant will
be magnified and their accommodation with Israel will become the
start point for all other arrangements.
Remember Alexandria.
Gas Starts Flowing
from Israel's Levant Basin, What Now?
By. Jen Alic
Washington DC (SPX) Apr 09, 2013
The first gas has
started flowing from Israel's supergiant Tamar gasfield in the Levant
Basin. Where it will go will redraw the Mediterranean energy map and
the geopolitics that goes along with it.
The Tamar field
stakeholders announced on 30 March that the gas had started flowing,
raising the value of Texas-based Noble Energy, which holds a 36%
stake, and Israel's two Delek Group subsidiaries, which each hold a
15.6% stake.
For now, the gas is
being pumped to mainland Israel, where it will feed the domestic
market, but exports should begin in 2-3 years. What Israel has in
mind is the European market, via a hoped-for undersea Mediterranean
pipeline to Turkey, which has the infrastructure to get it to Europe.
The competition for
this prized market is stiff. In total, the Mediterranean's Levant
Basin has an estimated total of 122 trillion cubic feet of gas and
1.7 billion barrels of oil. Lebanon and Cyprus are eyeing the same
market for their own Levant Basin gas resources. Cyprus has found gas
in its section of the basin, and Lebanon has announced a tender for
exploration off its shoreline.
The Greek Cypriot
government believes it is sitting on an amazing 60 trillion cubic
feet of gas, but these are early days-these aren't proven reserves
and commercial viability could be years away. In the best-case
scenario, production could feasibly begin in five years. Exports are
even further afield, with some analysts suggesting 2020 as a start
date.
Israel has the upper
hand right now in terms of development and production, but it lacks
the infrastructure without Turkey.
Israel was originally
hoping to lay a pipeline that would traverse both Cyprus and Turkey,
but there are too many political pitfalls to this plan (which would
essentially mean a final resolution to the Turkey-Cyprus spat). The
ideal would have been a pipeline that connects all the Levant Basin
resources-including Lebanon, Israel, Cyprus and Turkey-but this is
the stuff of geopolitical dreams.
In the end, it is
shaping up that an Israel-Turkey pipeline is not only possible, but
coming to fruition. Earlier this month an official apology from the
Israeli prime minister to his Turkish counterpart for some high-level
grievances was engineered by US President Barack Obama. It was an
unprecedented move by Israel and one that illustrates how important
this pipeline is for Israel. An apology was really the only thing
keeping Turkey from green-lighting this pipeline project without a
backlash at home.
This Israel-Turkey
pipeline makes Lebanon and Cyprus nervous. It essentially cuts them
out of the equation. Politics for now will keep Lebanon from
connecting up to any Israeli pipeline, and Turkey won't have a
connector to Cyprus.
Russia's Gazprom, of
course, is not keen to lose its stranglehold on the European market.
To that end, it's jumped in on Tamar itself, obtaining exclusive
rights from Israel to develop the field's liquefied natural gas
(LNG).
Here's the plan:
Russia is hoping to divert Israeli gas exports to Europe by banking
on these resources being turned into LNG for Russian export to Asian
markets instead. Russia is willing to invest heavily in a $5 billion
floating LNG facility to this end. In return it gets exclusive rights
to purchase and export Tamar LNG. (Gazprom has signed the deal but it
still awaits final approval from Israel).
For Israel, this is a
windfall. There is an estimated 425 billion cubic meters (16 trillion
cubic feet of gas in its Leviathan field, plus the 250 billion cubic
meters in the Tamar field, which is now officially pumping.
All this gas is worth
about $240 billion on the European market, and Tamar gas alone could
boost Israel's GDP by 1% annually. For now, the Tamar gas will result
in a decline in the price of electricity for Israelis by way of
reducing the production costs for the state utility.
For Europe, it will
mean newfound power to deal with Russia differently like it did with
the recent Cypriot bailout package that came along with a harsh
lesson for Russian oligarchs who are seeing their Cypriot banks
holdings sequestered.
No comments:
Post a Comment