An Alternative Approach for Israel's

Energy Exports
The decisions Israel makes on how to export gas to Europe from the Leviathan
field will have a positive geopolitical impact on Israel if conducted in a manner
.that takes into account the complex geopolitics of the region
3/18/2014,"",GeorgePapadopoulos

INN:GP

SinceApril2013,Israelhastransformeditselffromacountryalmostcompletelydependent
onforeignenergy,toonethatisenergyselfsufficient.TheoffshoreTamargasfieldis
alreadyoperatingatfullproductioncapacityandissupplyingIsraelsdomestic
requirements.Adjacenttothisfieldisthelargestnaturalgasdiscoveryofthepastdecade,
thegiant19trillioncubicfeet(tcf)leviathanfieldwhichhasbeenearmarkedforexports.In
recentmonths,IsraelhassignedexportagreementswithherregionalArabneighbors,the
PalestiniansandJordanians,tosupplynaturalgaswhichwilltransformIsraelintoanet
.exporterofenergyforthefirsttimeinitshistory

ThefoundingfathersofIsraelaresurelypleasedwithhoweventshaveunfoldedforthe
youngJewishState.AsIsraelfoughtnumerouswarsagainstenergyrichArabneighbors,
theoilweaponwassystematicallyusedagainstitandtheU.S.oncountlessoccasions
especiallyaftertheYomKippurWar.Ironically,itwasduringpeacetimesthatIsraelstreaty
partner,Egypt,decidedtocutallgasflowstoIsrael.Byfatescapriceandwhatisnow
acknowledgedwereMosesexcellentnavigationalskills,Israelwillnotonlybealarger
naturalgasproducerthanherArabneighborsintheeasternMediterraneanforthe
foreseeablefuture,butalsoanetexportertothem.Whilethesedevelopmentsarean
unprecedentedpoliticalandcommercialsuccessforIsraelandtheoperatorsdevelopingthe
offshoregasfields,thePalestinianandJordanianmarketsaresmall,andpipelineexportsto
bothdonotconstitutethesamepoliticalriskasIsraelsfarlargerandmoredangerous
.neighbortothenorth,Turkey

ThedecisionsIsraelmakesalongwiththeoperatorsdevelopingtheLeviathanfieldonhow
toexportenergytoEuropewillhaveaprofoundandpositivegeopoliticalimpactonIsraelif
conductedinaprudentmannerthattakesintoaccountthecomplexgeopoliticsofthe
.region

Recently,therehavebeencommerciallydrivenproposalstoconstructapipelinefrom
IsraelsgiantleviathanfieldtoTurkeyasthecheapestandfastestwaytoexportLeviathans
energytobothTurkeyandEurope.Whilethismaybetruefromapipelinecoststandpoint,
thequestionthatIsraelandEuropeshouldbeaskingis,isthisrouteinbothIsraelsand
Europesinterest?Theanswerisno.Theideaisbereftofthepoliticalrealitiesintheregion
anddoesnottakeintoaccountthepotentiallydevastatingimpactthisoptioncanhaveon
.IsraelsstrategicrelationswithEUmemberCyprus,andbyextension,allofEurope

InaspeechtotheBritishParliamentontheimportanceofassuringdependablesuppliesof
energyatreasonablepricesfortheBritishAdmiralty,in1913WinstonChurchillfamously
said:Onnoonequality,onnooneprocess,onnoonecountry,onnoonerouteandonno
onefieldmustwebedependent.Safetyandcertaintyinoillieinvarietyandvarietyalone.
InresponsetothethirdpotentialgascrisisbetweenUkraineandRussiasince2006,andby
extension,Europe,IsraeliandEuropeanstatesmenshouldtakeheedofChurchillswords
andlooktowardsIsraelandCyprusenergytodiversifybothsuppliesandroutesfrom
Russianstateownedmonopoly,Gazprom,andTurkeyasatransitcountryforEuropes
.market

Historically,Europeimportsapproximatelytwothirdsofitsnaturalgasdemandfromthree
sources:Russia,NorthAfrica/Qatar,andtheNorthSea.In2013,asaresultofpolitical
instabilityinNorthAfrica,QataripreferencetoshipLNGtothepremiumAsianmarkets
wherepricesfetchdoublewhattheydoinEurope,anddepletingindigenousproductionin
theNorthSea,thispermittedRussiatoobtainanunprecedented30%ofthe538bcm
Europeanmarketshare,andanincreaseof16%yearoveryearwhenincludingTurkey.
ImportstoGermanyandItalyspiked20%and60%respectively.DecliningNorwegian
productionandexportstoEuropeviatheNorthSea,whichhadachievedalarger
percentageoftheEuropeanmarketthanGazpromin2012,fell5%in2013.Consequently,
thispermittedRussiatosupplyapproximately30%moregasthanNorwaydidin2013to
Europe.PerhapsmoreworrisomeisthatdecliningEuropeanproductionisalongterm
phenomenon.DecliningindigenousEuropeangasproductioncanbemostidentifiedwith
thedepletingreservesintheNorthSea.Currently,thelargestgasfieldinEurope,thegiant
Groningennaturalgasfield,wasinitiallydrilledin1952.InFebruary2014,theDutch
.governmentnotedthatitwillcutproductionfromthisfieldby25%in2014

BrusselshasexpeditedplanstocreateadditionalenergycorridorstoEurope.Inthe
summerof2013,theSouthernEnergyCorridorwasdecideduponwhichwillchannel
energyfromtheCaspianSeatoEuropethroughTurkeyandGreece.Europespredominant
dependenceonsupplyandroutefromRussiaandTurkeyisaharbingerofinstabilityand
increasesenergyriskfortheEuropeanmarket.Ifhistoryisaguidetounderstandingthe
presentandchartingthefuture,bothIsraelandEuropeshouldbewearyofdependingon
.TurkeytobetheprimarytransitstateofLeviathansrichestoEurope

TherecentcrisisbetweenUkraineandRussiabeliesthenotionthatpeacepipelinescan
beconstructedtoimproverelationsbetweenneighbors.Atatimeofheightenedenergy
vulnerabilityinEurope,isitwiseforbothEuropeandIsraeltodependonTurkeytochannel
theonlyautonomouswesternenergyreservesintheentireregiontoenergyhungryEurope
whilerelationsbetweenTurkeyandEuropeandIsraelareatanalltimelow?IfTurkeys
secularminorityandwesternorientedoppositionwereabletoretakethecountryfromthe
irongripoftheIslamiststheanswermaybeyes.However,asTurkeycontinuestoabandon
thekemalistenterprise,andevisceratestheremnantsofthesecularrepublicmodernday
Turkeywasfoundedon,TurkeywillbecomeasunpredictableatransitrouteasRussiahas
beenasasuppliertoEurope.ThisisariskthatneitherEuropenorIsraelcanafford.
TurkeysabilitytocutIsraeligastoEuropecanbecomeacalculatedprovocationthat
stokesunrestforIsraelandparticularlysusceptibleEuropeancountrieswhicharealready
.vulnerabletopoliticallydrivennaturalgasblackmailbyRussia

FortunatelyforIsrael,andEurope,therearemorepoliticallysuitableexportoptionsto
EuropefromLeviathanthanthepipelineroutetoTurkey.IsraelandEuropehavean
opportunitytomitigatetheriskslistedabovebysupportingandpromotingfurtherenergy
cooperationbetweenCyprusandIsraelfortheconstructionoftheproposedLNGfacilityat
VassilikosthatwillhavethecapacitytoaccommodateLeviathansgas.Theconstructionof
thisfacilitycanalsoleverageCyprusstrongtieswithLebanontohelpfacilitateabinding
resolutiontothelonglastingmaritimedisputebetweenIsraelandLebanonbyalsoinviting
Lebanontoexportitsgastothisfacility.Thiswillvirtuallytransformtheeastern
.Mediterraneanintoanintegratedenergyzone

GascanthenbeexportedfromthisfacilitytoTurkeysregassificationterminalsasan
incentivetopromotethereunificationofCyprusandrepairrelationswithIsrael.Apipelineto
Turkeycanthenbeconstructedwhenpoliticalcircumstancespermit,notbefore.Thiswould
includefullnormalizationofrelationswithbothIsraelandCyprus.Thisoptionwouldineffect
exportIsraeli,Cypriot,andpotentiallyLebanesegastotheTurkishandEuropeanmarket
withouttheriskpremiuminvolvedthatthepipelineoptionwouldcurrentlyhave.Under
presentcircumstances,forthepipelinetobeconstructedfromLeviathantoTurkey,itwould
havetocrossCyprusexclusiveeconomiczone.Thisispoliticalinfeasibleforthemedium,
andpotentiallylongterm.CyprushasstatedthatitwillnotpermitapipelinetoTurkey
.throughitsexclusiveeconomiczonewithoutapoliticalsettlementtotheCyprusproblem

IsraelsstrategicrelationswithCyprus,andbyextensionEurope,arerapidlyimproving
whilerelationswithTurkeyareatanalltimenadir.Israelisgeographicallypartofthe
predominantlyMuslimMiddleEast,butthisdoesnotmeanithastobevulnerableto
extremismandisolationforever.ByexportingtoTurkey,Israelwillbeforeverconnected
withtheMiddleEastsproblems.EvenasIsraeladdressesthepoliticalandsecurity
challengesitfaces,Israelhastoworkoneconomicinterconnectivityinparallel.Regional
economiccooperationbetweenIsraelandCyprusshouldbetheguidingprinciplethat
.anchorsIsraeleconomicallytoEurope

Thephysicalconnectivitytransport,communications,andenergyinfrastructureby
exportingleviathansgastoVassilikoswilllinkCyprusandIsraelandEurope.Utilizedwisely
theabundantgasfromleviathancandriveemploymentandinvestment,whilegenerating
billionsinpublicrevenue.IsraelcanshapeitsowndestinyfirmlyapartoftheWestby
decidingtoexporttoEuropethroughitsEuropeanallies,orendureitsdestinytobechosen
.forit,byoptingtosubjectitsnationaltreasuretowhathasnowbecomearegionalmenace

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