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    Will Israel too Participate in Cyprus' LNG?



Turkey is offering to transport Israel's gas from the Leviathan to Europe via a pipeline through Turkey. Will Israel say yes or will it opt for Cyprus facility?

by: Karen Ayat

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Natural Gas & LNG News, News By Country, , Cyprus, Israel, Liquefied Natural Gas (LNG), Top Stories

Will Israel too Participate in Cyprus' LNG?

Cyprus revealed good news. Total’s interest in participating in the LNG project on the island was penned in an MOU. Noble Energy and its Israeli partners Avner and Delek also signed a similar agreement back in June of this year. Italy’s ENI communicated through its CEO that it is likely to join in the multi-billion dollar project should it discover substantial amounts of gas in blocks 2, 3 and 9 of Cyprus EEZ in which the company has an 80% working interest.

The contribution of those big giants is a great boost to a Cyprus keen to monetize its riches in the shortest delay in a quest to save its economy and take advantage of the tight window of opportunity before the natural gas game is over. The doubts over how the small nation of Cyprus will be able to afford such a costly undertaking are now attenuated although the likelihood of it coming to fruition still depends on the discovery of additional amounts of gas in Cyprus’ EEZ:  the amounts confirmed to date by Noble Energy as a result of the A2 appraisal drilling in Cyprus’ Block 12 Aphrodite field are not sufficient on their own (between 3.6 Tcf and 6 Tcf).

Will that mean Israel will join too? This is what Cyprus is hoping. With Israel’s helping hand, costs will decrease, the process will speed up and exports will be on their way to a Europe looking to diversify its energy supply and to an Asia accustomed to paying a high price tag. But what’s in it for Israel and does it have a plan B?

Rumours of an Israel considering to take on Turkey on its offer of transporting the natural gas from the Leviathan field all the way to Europe via Turkey have been heard. Not yet confirmed, obstacles seem to be on the way. While a Turkey-Israel reconciliation back in March promised a better diplomatic relation between the two and a possible energy partnership, the dynamics still seem to be tensed. Turkey itself is energy hungry and looking to diversify its portfolio, currently importing most of its natural gas from places like Azerbaijan. The pipeline project to Turkey would be economically viable for Israel and Turkish companies are vying to close the deal.  

But whether Israel and Turkey will move on from the Mavi Marmara ship incident that caused the death of 16 Turks on their way to provide aid to the blockaded Palestinian enclave of Gaza remains questionable. Yes, Israel did apologize. But is it enough? Ultimately, Israel will opt for the route that suits it best. Exports will happen, and this reality has been confirmed by the Supreme Court’s rejection of the petition against a 40% export quota. Israel might use Cyprus’ facility to reach its export markets. It might also go for a pipeline through Turkey. And it might consider both, even if the latter option is likely to unveil a whole set of new geopolitical questions.

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.  Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat