ISRAEL THE LAND OF GAS AND HONEY
Robin M. Mills is a Dubai-based energy economist and consultant, columnist for the National, and author of The Myth of the Oil Crisis and Capturing Carbon.
http://www.foreignpolicy.com/articles/2011/09/15/the_land_of_gas_and_honey
Mother Nature’s distribution of oil and gas resources around the world suggests she has a mischievous sense of humor. In the Persian Gulf, South China Sea, and Caspian Sea, large fields lie in disputed zones between unfriendly neighbors.
Now we must add another hot spot to that list. New, giant, natural gas finds promise to transform the energy security and economy of Israel and, perhaps, its neighbors. But these treasures could hardly have been better placed to stir up trouble, complicating three of the world’s most intractable conflicts: between Israel and the Palestinians, Israel and Lebanon, and Greek and Turkish Cypriots. The recent sharp deterioration in Turkish-Israeli relations makes disputes over gas even more fraught with danger.
Golda Meir, the feisty, cantankerous, and quotable fourth Israeli prime minister, used to complain that Moses led the Israelites through the desert for 40 years to bring them to the only place in the Middle East without oil. In 2000, after Britain’s BG had discovered significant volumes of gas at Gaza Marine, she was proved at least half-wrong when U.S. exploration company Noble Energy found a similar-sized field, Mari-B, in Israeli waters.
In 2009, though, Noble put these efforts completely into the shade. Some bold and creative geological thinking led it to find 8.5 trillion cubic feet (Tcf) of gas in deep water at Tamar, the world’s largest discovery that year. In late 2010, Noble uncovered an even larger field, aptly named Leviathan, containing 16 Tcf. These fields alone could meet U.S. gas demand for an entire year.
The Levant Basin, the geological area containing Tamar and Leviathan, spans not only Israel’s offshore but also that of Lebanon, Cyprus, and Syria. The U.S. Geological Survey estimates it could contain 120 Tcf of gas, equivalent to almost half of U.S. reserves. Given that Cyprus, Lebanon, Israel, and the Palestinian territories between them have a population of less than 17 million, that’s potentially a huge windfall.
The gas, therefore, suddenly eliminates one of Israel’s key strategic and economic weaknesses: its lack of indigenous energy resources. Tamar alone could supply all of Israel’s power plants for more than 20 years. And the discoveries are very timely, because Mari-B will be depleted by 2013 and because of the sudden insecurity of Egyptian gas imports.
Israel receives about 40 percent of its gas consumption from Egypt, though the deal is deeply unpopular there, with ex-president Hosni Mubarak and his cronies accused of underpricing the gas and profiting corruptly from sales. The pipeline through the volatile Sinai has been attacked five times this year, cutting supplies and forcing Israel to raise electricity prices by almost 10 percent in August to cover the increased costs of burning oil.
Replicating Israel’s success would likewise transform the prospects of energy-poor Lebanon and Cyprus. Cyprus is still reeling from the accidental destruction of its main power station, blown up in July by confiscated Iranian munitions stored with remarkable carelessness next to it.
Noble has been given the green light by the U.S. Embassy in Nicosia to go ahead with drilling in Cypriot waters adjacent to Leviathan. In contrast, Lebanon and Syria have been painfully slow to realize their opportunity. Major oil companies had looked at the area as early as 2001, yet Lebanon’s fractious parliament only passed an oil law in 2010 after enviously eyeing Israel’s success. Syria had planned to award exploration blocks this year, but this seems unlikely as long as the uprising against the Assad regime continues.
Meanwhile, the unfortunate people of Gaza, whose field arguably started the whole rush, suffer from daily power cuts. Long negotiations to develop their gas predictably went nowhere because the Israelis had no intention of giving the Palestinian Authority an additional source of revenue, especially after Hamas’s 2007 takeover of the strip.
The Israelis now have an abundance of riches. They could export gas to Jordan, whose economy is struggling under the burden of expensive oil. The Jordanians, though, might play them off against Iraq, a more politically palatable supplier that will also have excess gas to sell within a few years.
Other than that, without any friends in the region, the Israelis will have to look west for markets. They could have built a pipeline through Cyprus and on to Turkey and mainland Europe. But, with impeccable timing, Prime Minister Benjamin Netanyahu’s government has escalated a war of rhetoric against Turkey, as Foreign Minister Avigdor Lieberman reportedly threatened with his characteristic finesse to arm the Kurdish PKK group.
Instead, Israel will probably require more costly and complicated liquefaction facilities in order to ship the gas by tanker to customers in Southern Europe.
The other problem is the region’s territorial disputes. Israel and the Republic of Cyprus — that’s the Greek one — have delineated their maritime border and have shared economic interests. But the maritime border between Israel and Lebanon is not demarcated, and Lebanon has weakened its position with diplomatic missteps while each side has submitted its own claims. These will be hard to resolve: International courts and arbitration do not apply while the two states have no diplomatic relations, and Israel has not signed the 1994 Convention on the Law of the Sea.
The actual overlapping claims area is surprisingly small, and it seems clear that Tamar and Leviathan lie in Israeli waters. Yet Hezbollah leader Hassan Nasrallah has vowed to retaliate against Israel’s gas installations for any attempt to “steal” Lebanese natural resources. It appears that underwater gas could become another Shebaa Farms issue, a minor territorial claim exploited to perpetuate the Lebanese-Israeli conflict.
The Israelis are probably well capable of defending offshore installations against Lebanese or Palestinian threats, particularly as the wells will be on the seabed beneath 1,600 meters of water. Turkey is an entirely different matter. Turkey, of course, recognizes neither EU member Cyprus, having backed the Turkish Republic of Northern Cyprus since the 1974 war and partition of the island, nor the Cyprus-Israel accord.
Turkish Cypriot President Dervis Eroglu said in early August that Cyprus’s gas (not a molecule of which has yet been discovered) belonged not only to Greek Cypriots but to Turkish Cypriots and Turkey too.
Turkish pressure is likely to push Cyprus deeper into Israel’s willing embrace. Solon Kassinis, head of Cyprus’s Energy Service, fired back at the Turks, “I expected Turkey to bark, but I don’t think they will do anything … if they want to be considered a country that respects international law.” Greece, which has been wooed by Israel following its rupture with the Turks, vowed to defend Greek Cypriot sovereignty.
The most explosive issue, however, is the rupture of Turkish-Israeli relations. Although Turkey has no maritime border with Israel, nor much prospect of sharing in the offshore gas bounty, the Cyprus and Lebanon disputes give it an excellent opening to retaliate for Israeli intransigence over the Gaza-bound flotilla raid and other areas of dispute.
Interviewed by Al Jazeera, Prime Minister Recep Tayyip Erdogan declared on Sept. 8, “Turkey will not allow Israel exclusive use of the resources of the Mediterranean Sea” and said he planned to dispatch three frigates to confront Israeli warships. Israeli Infrastructure Minister Uzi Landau responded, “Israel can support and secure the rigs that we are going to have in the Mediterranean.” But in the current political climate, neither Turkey nor Lebanon wants to give Israel an easy path to riches.
The United States has urged Turkey and Israel to ease tensions, while saying that it viewed the gas discoveries overall as positive. In a few years, if all goes well, some brave soul in Congress might question the irony of a major gas exporter’s being the largest recipient of U.S. foreign aid.
But in the short term, the lure of riches makes conflict resolution more difficult and gives hard-liners on all sides another casus belli. Tamar and Leviathan are unfortunately not the catalyst for regional peace and prosperity, but, rather, more fuel in an already combustible mix.
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