Prospects for Israeli exports of natural gas

Until recently, Israel was not considered a country with serious energy resources. Everything changed in 2009, when large natural gas deposits were discovered near its coast. Now the question of how to properly dispose of wealth suddenly appeared at the disposal of the Jewish state is being decided. And Russians may well worry about the possible impact on the economy of the country's appearance on the hydrocarbons market of another serious player, especially since many analysts in the West, primarily in the United States, predict the ousting of Gazprom from its usual sales segments. Are these forecasts justified?

Where is the gas?

There are four deposits, Mari-B, Dalit, Leviathan and Tamar, the last two of which are considered to be the largest, with total reserves estimated at about eight hundred billion cubic meters. This is more than enough not only to meet all of Israel's domestic needs, but also to enter foreign markets.

Applicants

Immediately after the discovery of the deposits, the American company Noble Energy, with its offshore mining experience, showed great interest in their development, and even a contract was signed with it, but it was declared null and void by the decision of the Supreme Court of Israel. A fishing company from the United States insisted on a fixed tax rate, which was contrary to the Constitution of the Jewish state. But besides the Americans, the neighboring countries paid attention to the Israeli gas, which wanted to get the right to work together. There is no pipeline yet, and Jordan and Egypt have capacities for liquefaction. And Turkey is close, but its relations are not very good.

Pipeline or gas carriers?

Already at the end of last year, the press published information about Israeli-Turkish consultations on the possible construction of a pipeline across the Mediterranean. It was even called a deadline, 2019, when 30 billion cubic meters of gas would flow through it. M per year, of which 10 billion will be purchased by Ankara, and the remaining 20 billion will be diverted to Southern Europe. The question was investment, for which Tel Aviv invited interested countries to create a consortium. An alternative project involved the laying of a pipe to Cyprus, and through it to Greece and Italy. Both options have not yet been implemented. The time turned out to be very unfortunate, the prices for hydrocarbons fell, no one wanted to invest in the infrastructure of the industry, and objective economic difficulties arose. From the point of view of a long-term strategic perspective, the pipeline is preferable, but its construction requires high costs. The sale of LNG is easier to establish, but its cost increases liquefaction and expensive transportation by tanker-gas carriers.

Turkish difficulties

In Europe, many believe that the maximum diversification of natural gas supplies is extremely important, and this term is understood as the desire to reduce consumption of Russian blue fuel. In this position, producers of American LNG are interested, they want to sell their products quite naturally, quite by the way, quite expensive. Israel's interests are closer than European ones, this country wants to export gas, if possible, without investing in expensive projects. This is possible if buyers are found somewhere nearby, in the Middle East or in Northeast Africa. Turkey could be a perfectly acceptable partner, but there are fears in Tel Aviv about possible exacerbations in bilateral relations. An example of inadequate behavior of the leadership of this country against the backdrop of a very profitable, but broken, agreement with Russia on the "South Stream" is frightening. And if after the beginning of the construction of the pipeline to the shores of Israel again floated some "Flotilla of Freedom", or the plane of the IDF will assault the F-16 Turkish Air Force? What to do then?

The Terrorist Threat

Gas production in the open sea, and on land, too, is dangerous in itself, for technological reasons. Israel has lived for many decades in an atmosphere of constant threat. The main forces, which are trying to complicate in every way any processes of state activity, are terrorist groups: Palestinian Hamas and Lebanese Hezbollah. There is no doubt that these organizations will do everything they can to damage the gas platforms and industry infrastructure. For this, a variety of means, including missiles, can be used. In addition, according to the head of the planning department of the Israeli Navy Ilan Lavi, terrorists can use unmanned vehicles. Do not rule out the attacks of submarines and speedboats, controlled by suicide bombers. Thus, a reliable security system is required, and it will cost at least $ 700 million one-time with an annual cost of $ 100 million. For this, in particular, Israel needs four new frigates.

Is Gazprom's gas dangerous for Gazprom?

The problems that have hit Israel in connection with the unexpected happiness of acquiring gas wealth, this country will undoubtedly solve, there is no doubt about it. The leadership of Gazprom faces a different question, and it consists in assessing the likely impact of new volumes of goods entering the European market. Can Israeli fuel undermine the power of the Russian concern, take away part of the sales segment from it, or knock down the price? As for the cost, you can be absolutely calm. Not only that gas exchange quotations are directly linked by a special mechanism with oil, but also that liquefied raw materials transported in gas carriers are certainly more expensive. As for the volumes, they are, rather, compensatory. The extraction of North African suppliers, among which the main are Algeria and Libya, falls for various reasons. Gazprom provides a third of European consumption, a quarter is in Norway, and everything else has been coming from there. Moreover, Algeria, Libya and Egypt are gradually reorienting their own infrastructure from exports to imports. According to Vyacheslav Kulagin, director of the Center for the Study of World Energy Markets of the Russian Academy of Sciences, Israeli gas will simply replace the emerging deficit, and it will be very good if it is enough.

Terms of the beginning of deliveries

The construction of the pipeline is expensive and long, and before it is completed, it is not necessary to say that Israeli fuel will interfere in the European market to the Russian concern. In addition, the supply of LNG to Tel Aviv is still an acceptable option, providing flexibility of market policy: they will not buy here, so we will take them to another place. True, the supply of liquefied gas is growing every year, respectively, and competition is increasing, so that sooner or later the issue of the pipe will become acute. With the most favorable scenario, the availability of reliable investors and good market conditions, the project can be completed by 2022.

Current situation and policy

In the fall of 2015, Nobel Energy Inc. And Delek Group Ltd. A fifteen-year contract was signed to supply Israeli natural gas to Jordan for a total of $ 15 billion, which is currently in effect and is being implemented. This important trade and diplomatic breakthrough will undoubtedly serve to improve the political relations between the two countries. The problems of discrepancy in the assessments of the international situation in the Middle East region also exist with Europe. Israel, now the main supplier of gas to Jordan, recalls that the Palestinian issue in Tel Aviv is looked at differently than in Brussels.