DT
10
World
TUESDAY, JUNE 21, 2016
INSIGHT
How gas to warm ties between Israel, Turkey
Vast reserves
Israel and Cyprus, which have increasingly close ties, sit on an estimated 3,450bn m3 of gas buried in the Levant Basin, according to a US Geological Survey carried out late last decade. Those reserves are worth around $700bn and equate to enough gas to supply the entire world for a year. And that’s only proven reserves. A recent seismological survey conducted by a French consultancy suggested Israel alone may be sitting on nearly three times as much gas as first thought, according to Steinitz. The problem is not just the huge costs of drilling for the gas, but finding a route to deliver it to customers. While a portion of the gas would go for domestic consumption, the vast majority is earmarked for export. Unless Israel and Cyprus can lock in long-term export contracts, the costs of developing the deepwater fields will not be covered and the vast assets may never be fully exploited. Jordan, which has a peace treaty with Israel, may be a long-run buyer of Israeli gas, but is a modest market. Neighbouring Lebanon and Syria - both sworn enemies of Israel - are out of the question. Instead, Turkey and Egypt, with 80m and 93m people respectively, would be a far better fit as potential long-
Mersin TURKEY
2,000,000
Self-declared Turkish Republic of Northern Cyprus
1,952,790
1,464,593
1,000,000
REPUBLIC OF CYPRUS
Imports ($USD)
1,500,000
Potential oil and gas field
Kyrenia
488,198
Exports ($USD)
Imports ($USD)
SYRIA
NICOSIA Limassol Larnaca BEIRUT
976,395
500,000
0
Iskerendun
2,440,988
2,500,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
On the sidelines of a nuclear security summit in Washington in March, Turkish President Recep Tayyip Erdogan held a private meeting with Israel’s energy minister, Yuval Steinitz. It was the highest level contact between Israel and Turkey since diplomatic relations broke down six years ago after Israeli forces raided a Turkish ship bound for Gaza, killing 10 Turkish activists. The meeting, which lasted 20 to 30 minutes and whose details have not been previously disclosed, discussed the war in Syria, Iran’s presence there, terrorism - and natural gas. That last item is a key driver of efforts to forge a rapprochement between Israel and Turkey: At stake are reserves of natural gas worth hundreds of billions of dollars under the waters of Israel and Cyprus. To exploit them Israel will likely require the cooperation of Turkey. Since the Washington meeting, high-level envoys from Turkey and Israel have talked privately in Geneva and London to hammer out a deal on restoring relations between the former allies. Discussions have at times become bogged down: Israel wants Turkey to cut ties with Hamas representatives based in Turkey; Ankara wants reassurances on providing aid to Palestinians in Gaza, among other things.
GAS DISCOVERIES AROUND CYPRUS
TURKEY’S IMPORTS AND EXPORTS WITH ISRAEL
Exports ($USD)
n Reuters, Jerusalem
Leviathan (Noble +Delek)
MEDITERRANEAN SEA
Tamar
Gas exploration blocks Licenced to Noble Energy group
0 Year-to-date
Maritime boundaries Contested maritime border
Data via http://www.turkstat.gov.tr/
Golan Heights
ISRAEL
West Bank
Port Said
EGYPT
Mohammad Razon/ Dhaka Tribune
Haifa
Jerusalem Gaza Strip
Jordan
term consumers. An initial plan was to send some of the gas to Egypt, which already has small contracts to buy gas from Israel. But in the past year Egypt has discovered natural gas off its coastline and Egyptian President Abdel Fattah al-Sisi has said he will push ahead rapidly with developing its own energy resources. Steinitz says a deal with Egypt remains an option. But Israel is also turning towards exploring a pipeline to Turkey, both for consumers there and as a connection to Europe. A third option is a Cyprus-Greece-Europe route. As a result, restoring relations with Ankara is now a linchpin in Israel’s strategy to unlock its natural gas wealth.
Russia connection
Turkey imports the bulk of its gas from Russia. But Ankara’s ties with Moscow are strained, particularly over the Syrian conflict after a Turkish fighter plane shot down a Russian jet last November. In 2015, Turkey trimmed its imports of Russian gas by 300m m3 to around 27bn m3 a year, to the annoyance of Moscow. Yet Turkey’s rapidly growing economy still consumes 50bn m3 of gas a year and demand is set to double over the next seven or eight years, analysts say. Diversifying supply will be important. For Israel, building a pipeline to Turkey or Egypt is about the same distance, around 540km, and about the same cost, around $3bn. Turkey
An Israeli gas platform in the Mediterranean sea is more attractive because of its position as a gateway to Europe.
The Cyprus problem
Though Steinitz is hopeful of mending fences with Turkey, regional analysts remain sceptical of a gas bonanza in the East Mediterranean any time soon. Perhaps the trickiest issue is Cyprus. Since 1974 the island has been split between the Republic of Cyprus in the south and the Turkish Republic of Northern Cyprus,
after the Turks invaded following a military coup on the island backed by Greece. There are no diplomatic ties between the south, which is a member of the European Union, and Turkey. Large amounts of gas are located in the territorial waters of the Republic of Cyprus. If it and Israel are intent on coordinating their export strategy - and if Turkey is to be one of the routes - the divisions in Cyprus must be addressed first, analysts say. That’s because at least
REUTERS
part of the pipeline would have to pass through Cypriot territorial waters into Turkish territorial waters. British and Cypriot diplomats have talked hopefully about a breakthrough on reunifying Cyprus, but it remains far from certain. Even if a deal can be reached, it still may not mean all hurdles are cleared. Steinitz remains optimistic, convinced that Israel’s economic stability and energy security depend on developing the country’s gas resources in whatever way possible. l