Israel to Soon Announce the Leviathan Production Strategy
The partners in the Leviathan have decided on a development plan for the giant field as reported by Reuters. The field, estimated at 21 Tcf of natural gas, is located 130 kilometers west of Haifa in waters 1,500 meters deep. The partners submitted their proposal to Israel’s authorities in which they lay out the best strategy to develop Israel’s largest offshore field.
The Texan company and its partners had been struggling to develop an export plan since the country approved via a decision from Netanyahu’s cabinet ratified by the High Court of Justice a 40% export quota.
Building an LNG facility by importing Woodside’s expertise was a possibility for a while but a dispute between the Australian giant and the Israeli tax authorities ended such prospects. Israel has also been exploring regional avenues, discussing with its neighbouring countries the possibility of supplying them with some of its natural gas.
Jordan, looking to substitute the disrupted Egyptian gas could be an opportunity for an Israel struggling to find a way to reach distant markets. Egypt, once a net energy exporter, had miscalculated its domestic needs and is now also in desperate needs to overcome its shortfalls of gas, pressured by a growing domestic consumption and export obligations.
In fact, the Leviathan partners conducted a series of talks with Britain’s BG Group, the operator of processing plants located in Idku, Egypt. Exporting gas through Egypt via the facility would give Israel the flexibility to reach far reaching customers. Noble also signed a letter of intent with Jordan’s state-owned National Electric Power Co. to sell natural gas to a Jordanian in a potentially multibillion-dollar deal.
The strategy drafted by the Leviathan partners is expected to encompass those regional deals. The Leviathan is expected to reach production stage by 2018. It is predicted that the partners in the giant field will seek to commence by exploiting local opportunities.
Whilst some energy commentators went as far as suggesting that energy is deeply altering the geopolitical landscape of the Eastern Mediterranean and may open the door to new energy collaborations, it is difficult to imagine deep changes in security dynamics overnight.
Regional deals remain fraught with political tensions and still need to overcome public sentiments against an Israeli-Arab collaboration. Beyond immediate frontiers, Noble’s strategy will touch upon overseas opportunities and with the deteriorated diplomatic relations with Turkey, a Leviathan-Turkey pipeline scenario seems to be far-fetched. The proposal is now pending regulatory approval from the competent authorities and subject to its endorsement is expected to be announced in the weeks to come.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen firstname.lastname@example.org Follow her on Twitter: @karenayat