23/12/2015, Hedy Cohen
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"In terms of the eastern Mediterranean gas, the Turkish-Israeli friendship is based on long-lasting history. As we enter the year 2016, we are in a period where we must further enhance our connections with not only our neighbors but also world countries." For months, the owners of the rights to the Leviathan gas reservoir have been negotiating the exporting of Israel gas with Turkish companies, including Turcas and Zorlu Petrogas Petrol Gaz. As of now, however, no concrete deal is yet being discussed. Since the Marmara incident, relations between the countries have deteriorated, and Turkish President Recep Tayyip Erdogan has banned imports of gas from Israel. Given the difficulty in exporting Israel gas to Egypt, however, and in view of the fact that Turkey has experienced repeated disruptions in its supply of gas from Russia, both sides have expressed a desire to renew the negotiations.
Aksoy is now officially backing this line, saying, "Israel can help Turkey become a hub" and "Turcas is part of a consortium of companies that wants to import Israeli gas and market it to customers in both Turkey and Europe."
Aksoy spoke about Turkey's need to diversify its sources of supply, and stated, "Diversification of Turkey's natural gas sources, which will include Israel, among others, will help it lower the price of energy in the country… There have been substantial gas discoveries in the Middle East… We can achieve our goals only through resource variety."
The Turkish economy's consumption of gas is seven times that of the Israeli economy, and is projected to increase sharply and double in the next 20 years. Turkey has no gas resources itself, and is being forced to import gas from Iran, Russia, and Azerbaijan. Turkey pays a high price for the gas it buys: an estimated $15 per MMbtu to Iran, $12 per MMbtu to Russia, and $10 per MMbtu to Azerbaijan.
A pipeline is cheaper than LNG
The Turcas CEO also spoke about building a gas pipeline connecting Israel and Turkey, saying that exporting through a pipeline is always cheaper than exporting liquefied natural gas (LNG). He thereby hinted that exporting through the liquefaction facility in Egypt would be more expensive for Israel.
"A pipeline in the Middle East will be cheaper than exporting as LNG," Asksoy said, adding that the tension between Turkey and Russia only reinforces the need to build such a pipeline. If Israel exports gas to Turkey, it will be through an undersea pipeline from the Leviathan reservoir through Cypriot territorial waters to the southernmost place in Turkey, a distance of 485 kilometers from the reservoir.
Beyond the technical difficulties of building a pipeline in relatively deep water, another difficulty is that up until now, Cypriot prime ministers have rejected the idea, due to the tense relations between Cyprus and Turkey, which occupied the northern part of the island in 1974. Bryza commented on this in an interview, saying that the political disputes on the island were probably close to a solution, and that a referendum on the matter would be held in Cyprus next fall.
"Settling the conflict will help move the gas pipeline forward, and Cyprus will be very interested in such a pipeline," he said, adding, "Gas can be sent to Cyprus through the pipeline, and when the Aphrodite reservoir is developed, the direction of the pipe can be reversed, with gas flowing from Cyprus to Turkey," Aksoy asserted.
Published by Globes [online], Israel business news - www.globes-online.com - on December 236, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015
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Same story in the Cypriot press follows:
Turkey could take Israel’s gas by 2020 | in-cyprus.com (Cyprus Weekly)
23/12/2015
“We consider the Mersin port a feasible destination for Israeli gas,” the chief executive officer of Turcas Batu Aksoy told Today’s Zaman.
“The pipeline could then be connected either to the current infrastructure with some extra investment or to [the Trans-Anatolian Pipeline] TANAP, which is under construction. … The third option is to build one from scratch.”
Turkey and Israel are currently in talks on restoring official ties between the two countries after they broke down in 2010 following the Mavi Marmara incident. A final deal will not take long, a Turkish official told Reuters on Friday.
“I think that there is a serious, meaningful chance for thawing and normalising relations between Israel and Turkey. I also think that this is proof of the diplomatic value of the gas and the gas plan,” Israeli Energy Minister Yuval Steinitz told Tel Aviv radio.
The main obstacle to the long-delayed development of Israel’s giant Leviathan field was finally removed last Thursday when Prime Minister Benjamin Netanyahu signed a gas framework agreement after invoking Article 52 of the restrictive trade practices law to bypass a ruling from antitrust authority.
Delek, which is a partner in both Leviathan and the Cyprus Aphrodite field, announced shortly thereafter that it would “carry out the necessary actions for the rapid development of the Leviathan field and the expansion of the Tamar field”.
Given the ongoing conflict in Syria and the fact that Israel does not have a liquefied natural gas (LNG) plant, supply of Israeli gas to Turkey would probably have to go through the Exclusive Economic Zone (EEZ) Republic of Cyprus, which has no diplomatic relations with Turkey.
Under Article 79 of the UN Convention on the Law of the Sea (UNCLOS), “all States are entitled to lay submarine cables and pipelines on the continental shelf”. At the same time, “The delineation of the course for the laying of such pipelines on the continental shelf is subject to the consent of the coastal State.”
However, neither Israel nor Turkey are parties to UNCLOS. Nor is the US, the home of Noble Energy, also a partner in both Leviathan and Aphrodite.
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