Mar 12, 2014
Ukraine Crisis Has East Med Energy Executives Bullish
Ripples from the Ukraine crisis are being felt in the eastern Mediterranean, as energy executives in the region say they anticipate heightened demand for Israel’s off-shore gas reserves as Europe looks for ways to reduce dependence on Russia.
The stand-off over Ukraine offers a new “new opportunity’’ for energy companies in the region because it shifts the spotlight to recently discovered resources in the Levantine basin as way to help Europe diversify supply, said Gideon Tadmor on Tuesday, the chairman of Delek Drilling, an Israeli partner in a exploration consortium with Houston’s Nobel Energy that made two major Israeli discoveries in recent years and is searching for gas in economic waters belonging to Cyprus.
“This could transform our story into a global one,’’ said Mr. Tadmor, whose consortium has discovered nearly 40 trillion cubic feet of gas in recent years.
Similar expectations exist in Cyprus which plans to build a liquefied natural gas facility to export energy reserves from both Israel and the hoped-for future finds off the shore of the island nation. Amid talk of the U.S. beefing up natural gas exports to Europe, Mediterranean energy companies believe they might also have a strong pitch for potential customers.
“That’s exactly what we are saying,’’ said Nasos Kyriakides, an energy lawyer from Cyprus on the sidelines of a conference in Tel Aviv. “This is what we are trying to promote.’’
Still, before the Israeli gas can reach overseas markets like Europe there are still many hurdles to be overcome, including finalizing local regulations on energy producers and putting in place the necessary infrastructure to transmit the reserves to foreign countries.
Charles Davidson, the CEO of Noble Energy, said that even though his company is bullish on the potential for more reserves to be discovered in the region, foreign companies won’t invest in projects if Israel’s government doesn’t give them “certainty’’ that regulatory policy will not be overhauled periodically. Mr. Davidson said he expects to reach an agreement to bring Woodside Petroleum of Australia into the consortium in “very short time.’’
Mr. Tadmor told the conference that he considers geopolitics to be the most formidable obstacle in the way of exporting Israeli gas, in reference to Israeli tensions with Turkey and Egypt.
While Turkish importers and energy officials are very keen on a potential supply deal to slake that country’s energy demands and to ship through a pipeline to Europe, Israeli and Turkish administrations haven’t reached a reconciliation deal over the 2010 killing of Turkish nationals on a ship that challenged Israel’s maritime blockade on the Gaza Strip.
And even though Egypt, which has under-utilized liquefied natural gas plants, could serve as a transit hub where Israeli gas would be converted to LNG for shipment to customers outside the region, such an agreement would face strong anti-Israeli sentiment among the public.
Despite those complications – Israel and Egypt have already seen one natural gas deal collapse — Mr. Tadmor insisted that natural gas deals would eventually create economic interdependence in the region, helping to strengthen ties between regional neighbors.
“The gas not only brings huge economic benefits to this country but it also becomes a big bridge and a stabilizing factor,’’ he explained.
Link to source: http://blogs.wsj.com/middleeast/2014/03/12/ukraine-crisis-has-east-med-energy-executives-bullish/
