• Natural Gas News

    Putin and Netanyahu Hold Gas Talks: Report



Russia is trying to leverage its presence in Syria to gain a foothold in Israel's gas industry

by: Ya'acov Zalel

Posted in:

Top Stories, Political, Ministries, East Med Focus, Infrastructure, Pipelines, East Med, News By Country, Israel, Russia, Turkey, United States

Putin and Netanyahu Hold Gas Talks: Report

Russia's President Vladimir Putin and Israel's Prime Minister Benjamin Netanyahu discussed Russia's role in the Israeli natural gas industry last week at a meeting in Moscow, according to a report on the Russian news website Sputnik.

The meeting, which took place last Thursday at the Kremlin, was accompanied by unconfirmed reports in Israel of aerial incidents between jet fighters from Israel's air force and Russian jet fighters based in Syria. No casualties were reported and the reports were later denied by the Kremlin spokesman. However the reports enabled Netanyahu to present the visit as security-related, with no official mention of no gas discussions.

Putin's interest in Israeli gas is neither secret nor new. In 2012 Russia's Gazprom discussed the possible purchase of a 30% stake in Israel's offshore Leviathan gas field. In 2013 Gazprom signed a contract to purchase much of the Tamar gas field's production but the contract wasn’t approved by Israel's Energy Ministry.

In the last few months, following Russia involvement in the Syrian civil war, there were a few allusions to a renewed interest from Russia in the Israeli gas in order to gain a foothold in the Israeli gas industry. Through its activity in Syria, Russia is now pressing Israel, a long time US ally, to comply with its East Med policies by isolating Turkey in the region and giving Russia a foothold in the East Mediterranean, a great geopolitical tool. For the past four months Israel-Turkey reconciliation talks have been dragging on; Russia opposes this reconciliation.

Russian involvement could reduce financial risk for Israeli offshore gas operation and increase the gas fields' security, as Russian allies like Hezbollah in Lebanon or Iran would not target Russian joint ventures. A few months ago, referring to Russia's possible involvement in the Israeli natural gas industry made, Putin told Netanyahu: “We will make sure there will be no provocation against the [Israeli] gas fields by Hezbollah or Hamas. Nobody messes with us.” If that were to happen, then Russia would wrest control over the East Med's most important natural gas resources and would maintain Turkey's dependence on Russian natural gas. It also would reduce any European interest in Israeli gas as a partial alternative to Russian gas.

It is still not clear what Netanyahu thinks of this option, however. His government and the opposition contains pro-Russian politicians who might prefer this as a solution that might hasten development of Leviathan. In his visit to Moscow he was accompanied by Zeev Elkin, a Ukrainian-born politician who is currently serving as a minister.

Israel's gas sector has suffered from the global decline in gas prices, from key US developer Noble Energy's financial difficulties, and the rejection last month by the High Court of Justice of the stability clause in the country's natural gas framework. Currently, Gazprom involvement appears as a viable alternative to resuscitating the sector. However Gazprom is a state entity that has also suffered from the downturn in gas prices.

The Leviathan Partnership partners wouldn’t object to a partnership with Gazprom, particularly if it would assume the marketing role. Noble is seeking to raise funds by selling some of its holdings in both Tamar and Leviathan, according to media reports this month, and Delek has to sell off its holding in Tamar within six years following the approval of the natural gas regulatory framework. Gazprom might also invest in Tamar and take part in its expansion program.

However, any involvement of the Kremlin through Gazprom in Israel's gas industry would be opposed vigorously by the US administration. During the last few years the Americans have tried, but failed, to broker gas deals between Israel, Egypt, Jordan and Turkey.

Now Putin, through his actions in Syria, is trying to press Israel militarily and lure it economically with gas deals to tow the line of his East Med policies.


Ya'acov Zalel