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Israel’s Mediterranean pipe dream

  • Saad Hasan
  • 27 Jan 2020

Within a decade, Israel has become self-sufficient in meeting its energy needs but it’s hardly the major player it projects itself to be.

Greece's Prime Minister Kyriakos Mitsotakis, center, Greek Cypriot President Nicos Anastasiadis, left, and Israeli Prime Minister Benjamin Netanyahu pose at a signing ceremony in Athens for EastMed pipeline. ( AP )

The late Israeli prime minister, Golda Meir, was well known for her remarkable wit. There are pages and news stories dedicated to her words. But one quote stands out in the current context. 

During a state dinner in 1973, she said: “Let me tell you something that we Israelis have against Moses. He took us 40 years through a desert in order to bring us to the one spot in the Middle East that has no oil.”  

She died in 1978. One wonders what she would have said if she was still around. This month, Israel began exporting natural gas to Egypt. That’s an incredible transformation for a country that was entirely dependent on energy imports just a few years back. Now it produces enough gas to generate half its electricity, run many of its factories and still spare some for export. 

The discovery of large gas reserves off the coast of Israel in the Mediterranean Sea has shaped Tel Aviv’s diplomatic ties in the region — for better or worse — depending on who you ask. However, there’s a general agreement among experts that the Jewish state is using it to redraw alliances. 

“Ever since the gas was discovered, Israel has wanted to use it as an instrument of diplomacy,” Dr Sujata Ashwarya, the author of Israel’s Mediterranean Gas: Domestic Governance, Economic Impact and Strategic Implications, told TRT World

Although the Tamar and Leviathan offshore fields are enough to abate Israel's energy security concerns, they are still not enough to turn it into a “Gas King”, she says. 

The numbers just don’t add up. 

Israeli discoveries in the disputed Levantine Basin amount to 950 billion cubic metres (BCM). Israel’s total gas consumption in 2018 was around 11 BCM. Sitting on such a horde means it doesn’t have to worry about gas for several years to come. 

Technically speaking, the 950 BCM quantity is what’s known as the 2P reserves — the proven and probable amounts. The actual quantity that can be economically pumped out comes to around 480 BCM.

Dr. Ashwarya, who is an Associate Professor of Middle Eastern studies at New Delhi-based Jamia Millia Islamia, said major gas producing countries such as Iran have much more output in a single year. “Norway’s annual production is 120 BCM and the Russian Federation’s output goes up to 669 BCM.” 

Yet, for reasons that go beyond the economic, Israel is placing itself as a significant player in the eastern Mediterranean. 

What’s with the EastMed Pipeline? 

On January 2, Israeli Prime Minister Benjamin Netanyahu, Greek Cypriot President Nicos Anastasiades and Greek Prime Minister Kyriakos Mitsotakis attended a signing ceremony in Athens for the Eastern Mediterranean (EastMed) pipeline. 

The 1,900 kilometre-long pipeline will run from Israeli waters to Greece and onwards to Europe. If constructed, it would be the world's longest subsea pipeline and cost anywhere between $7 billion to $11 billion. 

Some are hailing it as Europe’s answer to reduce dependency on natural gas imports from Russia. The European Union meets 40 percent of its natural gas requirements with imports from Russia. But differences over Ukraine and Crimea have raised concerns about the EU’s energy security. 

“It’s truly a pipe dream,” said John V. Bowlus, Editor-in-Chief of Energy-Reporters.com, which offers news and analysis on Europe’s energy issues, about the EastMed project. Besides the proposed pipeline’s high cost, he said: “We are talking about transferring only 9 to 11 BCM a year which is nothing. Europe imports over 200 BCM a year.”

Just recently, Russia and Turkey opened up the TurkStream pipeline, which runs across the Black Sea and brings gas from Russian town of Anapa to the Turkish region of Thrace. And that’s  just one of the many ways in which Russia’s Gazprom sells gas to Europe. 

In December, Russia and Ukraine renewed their gas transit agreement for another five years. Work has also started on the NordStream 2 pipeline, which will take additional Russian supplies across the Black Sea to Germany. 

But there’s more to this so-called gas diplomacy than a pipeline that exists on paper. Since hitting large finds in the last decade, Israel has grown closer to Cyprus and Greece — to the annoyance of its long-term ally Turkey. 

Israel's Levianthan gas field can meet Israel's gas needs for many years to come but it's still not big enough to sustain exports.(AP)

The Turkish question 

“Turkey will not permit any activity that is against its own interests in the region. Any plan that disregards Turkey has absolutely no chances of success,” said Fuat Oktay, Turkey’s Vice President. “Turkey is a nation that will not bow its head to threats or sanctions.” 

The Turkish warning came around the time the EastMed project was announced. Turkey has a lot to complain about. One of the largest economies in the region, it relies entirely on imports to meet its energy needs and has built a vast pipeline infrastructure to feed gas to homes, power plants and factories. 

Transnational pipelines from Russia and Azerbaijan use its territory, which sits on the edge of Europe and has long been seen as a reliable transit hub. 

“For Turkey this EastMed pipeline is a red line,” Bowlus told TRT World. “I don't blame Turkey for its actions and I find its Libyan strategy quite clever.” 

In the last couple of years, Turkey has ramped up efforts to search for oil and gas in the Eastern Mediterranean. It has sent drilling rigs off the coast of Turkish Republic of Northern Cyprus (TRNC). 

Since the mid-1970s, the island of Cyprus has been divided between the Greek-speaking Greek Cyprus and the ethnic Turkish TRNC. Ankara says Turkish residents of the island have equal rights over the natural resources found in its waters. 

Turkey has sent its own drilling rigs to find oil and gas reserves in the eastern Mediterranean.(AP)

Recently, Turkey and Libya agreed to a maritime boundary that will allow them to better utilise their resources. It was also a way for Ankara to tell Israel, Egypt and Greece, that it won’t watch from the sidelines. 

Like the EastMed pipeline, these countries along with Jordan, Palestine and Italy created the Eastern Mediterranean Gas Forum last year as an OPEC-type body to regulate supply and demand. Turkey was excluded for that alliance as well. 

Historically, Israel had maintained a neutral stance on the status of Greek Cyprus. But as Gabriel Mitchell, a fellow at the Israeli think tank Mitvim Institute, pointed out, Israel’s policy changed after July 2019 when it joined Greece, Egypt, the EU and the US to express concerns about Ankara’s drilling activity. 

“This was not a formality but an important first in Israeli diplomacy,”  he wrote. 

In spite of the differences, Israel might probably end up selling gas to Turkey in the future. 

“Turkey and Israel share important economic and geo-strategic interests, and that makes an eventual rapprochement with Turkey a desirable outcome for Israel in the future if conditions are right,” Mona Sukkarieh, a political risk consultant and Co-Founder of Beirut-based Middle East Strategic Perspectives (MESP), told TRT World. 

In 2016, Ankara and Tel Aviv were even in talks to build a pipeline to connect Israeli gas to Turkey’s pipeline system for onward delivery to EU. 

“Turkey believes that it has been left out of the Mediterranean gas game despite being a major power. It is a country with a big economy and suddenly such a big thing is happening in the Eastern Mediterranean and it’s not part of it,” said Ashwarya. 

For Israel, selling the gas as quickly as it can makes sense. The global gas market is facing a glut with more supply than demand. With a growing drive in different countries to cut the use of fossil fuels, there are questions about its future. 

“If I were a gas exporting country or I had gas assets, I’ll try to sell them, get the product going. Because, with the energy transition, you don’t know where the prices are going,” said Bowlus. 

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