The impact of the coming rise of Israel as a regional energy superpower plainly heralds significant and imminent changes in the Middle East, and beyond
But don’t take my word for it. Take the words of Russia’s Vladimir Putin or, much more significant, his recent actions. Shaken by the success of the US shale gas revolution and the threat to Russia’s stranglehold on European gas supplies that a prospective eastern Mediterranean supply carries, Putin’s Kremlin has, in recent months, feted Israel as never before.
In February this culminated in Russia’s Gazprom signing a landmark deal giving Russia a major stake in the future distribution of massive Israeli gas resources. It is also likely to be just an entree deal now that Moscow has a place at the Israeli energy table.
In early 2012, Noble Energy, the US partner of the major Israeli energy companies, announced a new find of 1.2 to 1.3 trillion cubic feet of gas in the Tamar prospect. Noble is confident that there may be up to a dozen more such gas discoveries to be made in the Tamar field. Yet the Tamar and Dalit offshore Israeli gas fields are just the beginning.
Others are showing signs of significant quantities of gas, including the Aphrodite 2 field, 100 miles from Haifa. But the enormous Leviathan gas field overshadows them all. Leviathan is estimated to have twice the amount of gas of Tamar and should come online between 2016 and 2018. But Leviathan and Tamar also hold out the further tantalizing prospect of significant amounts of oil.
Then there is Israel’s eastern Mediterranean partner, Cyprus. In February 2013, the Israeli energy companies Delek and Avner signed an agreement to acquire a 30 percent stake in exploration rights off the southern coast of Cyprus. With equally large gas prospects around Cyprus, the eastern Mediterranean basin is on the path to becoming a major player in global energy production, and soon.
All this has not been lost of the energy giants as the Russia Gazprom deal, which includes a commitment to build a floating LNG terminal off Cyprus, makes clear. That hub will convert Israeli and Cypriot gas for onward transmission to Europe or Asia.
For all its mounting gas and oil discoveries, Israel has been having trouble in attracting the investment of the energy majors who fear the threat of their energy investments in Arab states. But that is changing.
Recently the French energy major Total signed an exploration contract to explore two blocks of southern Cyprus. In February, Woodside Petroleum, Australia’s second largest oil and gas producer announced it would pay as much as $2.3 billion for a stake in Israel’s giant Leviathan field. All of this is highly significant as it signals a very real change in the geopolitics of the region.
But it’s not just enormous reserves of natural gas that is set to see the Star of David rising to global energy prominence offshore. Israel has oil too – and a world class amount of it. Most importantly, as well as the great potential for oil finds in its deep offshore reservoirs, Israel is set to develop a major shale oil prospect the Shefla Basin, south-east of Jerusalem.
It’s where David slew Goliath. The Valley of Elah lies thirty miles to the south-west of Jerusalem. The World Energy Council estimates that Israel’s Shefla Basin shale oil deposits could yield a cool 250 billion barrels. To put that in perspective, it’s a figure that would catapult Israel into the elite with the world’s third-largest proven oil reserves, just behind Saudi Arabia and Venezuela.
Such is the significance of the amount of oil in the Shefla Basin that it didn’t take long for big hitting private investors, including Jacob Rothschild and Rupert Murdoch, to take a major stake in Genie Oil and Gas, the parent company of Israel Energy Initiatives who are running the project.
In February, the state owned Israel Natural Gas Lines announced that it was seeking $1 billion to fund new pipelines. Whilst developing a vital energy infrastructure has become a priority for Israel, the security implications are only too well understood.
But if OPEC’s members, already feeling the heat of the US shale gas and oil revolution, feel inclined to consider military action, it could only be in the form of utilizing proxy terrorist groups. Anything else would mean taking on a possible grand alliance of Israel, Russia, Greece and Cyprus. Equally, the rise of an energy-driven non-Muslim alternative powerbase in the Middle East offers a serious counterpoint to help offset the growing Islamist threat posed by the growing instability in North Africa.
Neither do the ramifications of the Israeli-led energy developments end there. Some Arab states are already breaking ranks. The fledgling Arab state of South Sudan, which sits on top of around 80 percent of Sudan’s oil reserves, signed a new deal in January to keep Israel supplied with oil while developing its own reserves. Jordan too is reportedly in secret talks to buy some of Israel’s Tamar gas to power a potash plant on the Jordanian side of the Dead Sea. The State Oil Company of Azerbijan (SOCAR) has also turned to Israel as a “proving ground” to help its own development as a major energy producer.
Last Autumn, the Caspian Drilling Company, a subsidiary of SOCAR, bought a five percent stake in Israel’s small Med Ashdod oil field. It proposes to utilize the deal to draw on growing Israeli technical expertise.
Israeli’s reputation for high-tech expertise is already a recognized phenomenon. As one of Israel’s oil pioneers, Tovia Luskin, has pointed out, Israeli tech could “solve the world’s energy crisis if red tape doesn’t tie it up”. Luskin wants to use some of the revenue to fund a university as a global centre of excellence able to train engineers in oil exploration and energy management. Until the bureaucratic issues – how much does the Government take in revenues – are resolved in Israel that vision remains on hold however. But the point is nevertheless well made: Israel is in prime position to give a lead in a new era of Middle East energy developments.
Even so, the impact of the coming rise of Israel as a regional energy superpower plainly heralds significant and imminent changes in the Middle East, and beyond. First, for the fast-diminishing tyranny that is OPEC. Second, in the geopolitical re-alignment the new eastern Mediterranean energy alliance represents. Third, the literal shift of power away from the world’s oil and gas ‘tyrannies’ that the new energy realities – including Israel’s rise to energy superpower status – represent for the democratic world.
Peter C Glover is co-author of the bestselling Energy and Climate Wars and is a contributing editor at The Commentator. For more: www.petercglover.com
http://www.thecommentator.com/
Glad to see Glover’s article was aggregated at The Commentator, but it was also a direct link today at RealClearEnergy to: http://www.energytribune.com/75537/israels-rise-to-energy-superpower-under-way
VERY good article – have been following this for two years – but this map is the best.
My header? Why David slew Goliath – for the oil!
@ CuriousAmerican:
Actually all the land and area belong to Israel. Gaza is a terror base primarily run by Hamas. So who cares what they want until they stop trying to destroy Israel. Abbas and his cronies only differ to tactics not outcome desired. They are not willing to compromise on this so why do you care what they want?
Guest1967 Said:
Tried their pastries but not their coffee.
@ yamit82:
Israelis have ROLADIN coffee, right? Pretty good, but VERY expensive!
yamit82 Said:
Not really, I base it on the qatar request to Israel to make a large investment to rebuild Gaza(I read this a few months ago), this would not make sense in a continuing war scenario; the sudden appearance of Qatar proactivly on the scene re financial support to Egypt, financial support to hamas,involvement in recent gaza ceasefire, involvement in libya/syria events, recent diplomatic trip to faux pal immediately after statehood declaration(these visits are often symbolic messages). I relate this to Qatars past relations with Israel, it’s general diplomatice pragmatism (eg its behavior with Iran). I relate this also to the coincidence of Qatar being involved in the largest gas field in the world (which it shares with Iran) at the same time of the Israeli venture into the Gas world and all the pots being stirred; to top it off I relate it to the current saudi/Qatar relations which indicate to me a singleness of purpose re Syria,Libya, sunni hegemony. I relate it to the GCC invitation to Jordan to join the GCC and Jordans abdullah also visiting pals state in diplomatic symbolic visit. I relate it to the sudden rehashing of the confed idea and the story that the Abbas has instructed the PA tp prepare for a confed and that Pal cannot survive without such a confed(couple of months ago). The only thing that makes sense to me is that the Sauds?Qatar/GCC/Jordan have put the pal “struggle” on the back burner and the sunni/shia/iran issue up front. Whether this is a permanent paradigm shift or a temporary shift I do not know?
The signs I have and will look for are the strengthening of the Jordanian and PA ties, the strengthening of egyptian/hamas ties and the involvement and relationships between Saudi/Qatar/Jordan/GCC and their relationships with PA/Gaza/Egypt/Turkey and their involvement in Syria/lebanon/iraq and their position regarding Assad/hezbullah/Iran. Suddenly Saud/Qatar are everywhere in every scenario.
RE economic reasons? I also do not see economic reasons for Qatar & Saudi investment in arms and mercenaries to Libya/Syria, afgha. in the 80’s, madrassas all over the world, investments in major mosque projects globally, investment in college campuses world wide,investment now in Egypt, etc.
@ CuriousAmerican
According to the Times of Israel article, Israel is willing to allow Gazans to develop this gas field, but has Hamas indicated, in any way, that they will support this initiative? Should we expect such support from Hamas? No to both questions; don’t you think?
Eric R. Said:
Actually Starbucks had a short life span in Israel. We Israelis never liked their coffee. We have our own tastes. I think after a year they folded here. 😛
yamit82 Said:
Man, your Starbucks are VERY expensive… 🙂
Bernard Ross Said:
Gaza Gas reserve estimates too small for a major investment. Only Israel as purchaser might justify such an investment maybe Egypt as well. Consider that there is a glut on the gas market and prices today are very low.
Why would anyone want to invest in Gaza? I am speaking here for economic reasons. Investors have many many options all over the world why Gaza?
When you ask why, your theory falls flat.
CuriousAmerican Said:
I beleive the qataris will be involved. They requested of Israel to make large investments in gaza, they are integral in the cease fire and are propping up egypt. Furthermore Qatar shares the worlds largest gas field with Iran.
From your link(which is an Israeli report and proposal to the EU)
My suspicion is that nothing can move forward without Israeli approval. Perhaps there are quid pro quos with Qatar and Israel.(eg stability from gaza in return for investment in gas)
Good answer!
@ NormanF:
Having the Russian Bear in Cyprus is about as close as I would want them to us. They could demand control of the Cyprus gas fields which would give them an economic as well as a military foothold in the Med. Russia like America may be in steep decline but they can still create a lot of trouble. I would rather have them on our side for economic and strategic reasons than for professions of we have common values and etc. I can accept common interests as a reason for cooperation all other reasons and 5 bucks will buy a Cafe Latte in Starbucks.
yamit82 Said:
Yamit, Russia may be looking for a naval base in Haifa. Don’t laugh. With Syria collapsing and Cyprus looking shaky, Israel is the last stable country in the eastern Mediterranean. The Russians need to park their ships somewhere and they will look to warm up relations with Israel. Gazprom’s entry into the Israeli energy market is sign of where the Russians think their future interests lie.
@ CuriousAmerican:
Actually legally the gas field still belongs to Israel as do all mineral resources up until such a time that a recognized sovereign state replaces Israel and settles any legal claims Israel might make. Barak allowed Arafat to make a deal with BG probably for a cut for himself but after paying Arafat $ 50 million the only ones who seemed to come out ahead of that deal was Arafat and Barak and now Suha Arafat is living comfortably in the South of France partially of BG advance payment.
Israel hardly needs to take possession as our fields border theirs and by diagonal drilling and pumping we in all probability are harvesting the crop with any partners. The TI story has Tony Blair all over it and all he is looking to do is to get for himself and his backers a piece of the pie. By the time anybody gets to check out the Gaza crop they may well find there ain’t none. BB is well aware of what’s going down and will probably keep Blair off his ass by pointing to Hamas in Gaza as a virtual sovereign. If Israel does not purchase the Gaza gas it’s worthless and nobody will invest. Gaza market too small for the huge investment and by world standards the field is not large. Egypt can’t develop her own reserves and everything they touch turns to sh..t just like South America. I worked the Sinai fields for almost two years and was there when we discovered gas and oil. Egyptians subsidize all of the basic necessities including gas. That means the government covers the difference. Since Egypt is bankrupt who is going to fiance the billions needed?
You keep looking for any angle to justify your Jew hatred but are highly selective with your facts and data.
How about taking the profits from Gaza Gas and pay the Gaza Arabs to leave? All go or none how can you work that out?
By the way, the Muslim world will inevitable try to make sure Israel pays a form of jizya to make oil and gas from Israel less competitive. Muslims and Christian European countries have taxed Jews to death over the ages and perhaps the day will come when supplies will be so plentiful we can tax the hell out of imports from OPEC countries just to redress some of the wrongs of the past.
The current rage among leftists is to make restitution to indigenous people in the form of apologies, land and monetary compensation. Jews are an indigenous people – the original indigenous people. I suggest that the Jewish people are owed plenty of compensation from Muslims who have never been asked to pay up for their brutality and immorality with regard to their indecent jizya and eternal intolerance of Jewish people.
@ CuriousAmerican:
Not until there is a final peace agreement. Let that be an incentive to make a deal.
Good thing that oil and gas are both fungible, they can be traded and sold on world markets without having to identify or trace their sources. Otherwise, the BDS fascists might have a chance at expanding their Jew-hating boycotts against Israel.
But it is not only Jews who are being targeted by BDS troglodytes; Canada is also in the cross-hairs of the same kinds of maniacs who do not like western capitalism and oil and hate the idea of safe and secure supplies of cheaper energy with the accompanying employment and R&D opportunities. They have not figured out that present day “alternatives” are even more costly, dirty, impractical and unwieldy, and they prefer oil from areas of the world that share their hatred of the West – for ideologically-depraved reasons. The Saudis and OPEC countries are not-so-secretly funding efforts to team up with leftists bent on targeting Israel and up-and-coming oil producers such as Canada and Israel.
I can’t wait for the day when Arab countries no longer have the excess funds to pour into international jihad, terrorism and BDS campaigns. I think that activists (funded by Israel perhaps?) must become aware as soon as possible that efforts need to be made to counter the lobbyists and BDS hatemongers with campaigns of our own to discredit their battle to make us poorer and dependent and to make Islamist and Communist countries richer and independent.
And, by the way, some of the countries involving themselves in Israel’s oil projects need to be screened and scrutinized very carefully because business allies must also be political allies or, at minimum, non-belligerents.
I hope the oil is plentiful. Europe’s politics follows its oil supply, not its conscience.
Now a question for Ted: There are gas fields off of Gaza, should the Gazans be allowed to develop it?
http://www.timesofisrael.com/israel-agrees-to-develop-gas-field-with-palestinians/
I am sure the Palestinians would prefer to have the Egyptians develop the gas.
Russia’s Masterstroke: Bailing Out Cyprus That was headline last June but the Russians missed a window of opportunity.
Cyprus was a prey Russia has long been eyeing, both as a substitute for Syria, and as a permanent naval base for the Russian fleet in the Mediterranean.
That was before the Cypriot bank collapse and the Russians being given a financial haircut of some 30 billion dollars.
Russian crooks being taken by Greek crooks is the stuff of Sophocles (c. 495-406 BCE) and Aristophanes (c. 446-388 BCE):
Have the Russians thus lost their leverage with Cyprus or can they still pull a rabbit out of the hat and at least secure Russian naval bases in Cyprus?
Not all Roses…Shell to sell Woodside stake, fearing Arab boycott
Royal Dutch Shell owns 23% of Australian company Woodside, which has agreed to buy 30% of the rights to the Leviathan field.
Energy giant Royal Dutch Shell plc (LSE: RDSA) will sell its holdings in Australian energy company Woodside Petroleum Ltd. (ASX: WPL) because of the Leviathan deal and concerns about the Arab boycott. Three months ago Woodside agreed to buy 30% of the Leviathan field’s rights for $1.5 billion. Shell has a 23% stake in Woodside.
In a survey published by Commonwealth Bank of Australia (CBA) analysts Luke Smith and Lachlan Cuskelly wrote, “We anticipate a sell-down to dispel any perception amongst other Middle Eastern countries that Shell is investing either directly or indirectly in Israel.”
The bank values Shell’s stake in Woodside as worth $7.2 billion and believes that Australian mining company BHP Billiton Ltd., which also has energy interests, is a leading candidate to buy the shares. Shell said that the report was “speculation.”
Shell, the world’s largest public company according to Forbes 2012 rankings, has huge energy interests in the Middle East. Concern about the Arab boycott has deterred many major international energy companies from entering Israel’s gas and oil energy exploration sector. British Gas was the only major international company that agreed to work in Israel but it abandoned the market in 2006.
Woodside, which specializes in liquid natural gas (LNG) projects in Australia, agreed to buy a 30% stake in Leviathan on December 3 2012.
Leviathan contains an estimated 18 trillion cubic feet of gas. The field is operated by Noble Energy Inc. (NYSE: NBL), which was a small US company when it moved into the Israeli market. Noble owns 39.66% of Leviathan, Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) own 22.67% each, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%.