Notes from the Knesset: US Interests and Regional Politics of Israel's Gas Framework | Natural Gas Europe

Dore Gold (Image Credit: Israel Ministry of Foreign Affairs)

December 05th, 2015

American interests are showing impatience due to the delay in the approval of the natural gas regulatory framework in Israel, representatives of the Israeli Foreign Office have argued during a hearing at the Knesset's (Parliament's) Economy Committee.

During proceedings, Dore Gold, the Ministry's Director General presented a paper, issued by the U.S. State Department, titled "Investment Climate Statement 2015." In that document, the State department expresses concern because of Israel's antitrust authority's decision not to exempt Noble Energy from Israeli antitrust law.

"Particularly concerning was the December 2014 announcement of Israel's Antitrust Authority (ATA) that it may declare that the U.S company developing Israel's offshore gas [Noble Energy] and its Israeli partners are party to an agreement in restraint of trade… This antitrust threat is having a chilling effect on further investment in the sector," the paper says.

In his testimony to the Economic Committee, Mr. Gold also spoke about relations with Jordan. Mr. Gold said a Letter of Intent (LoI) signed with the Jordanian electric company (NEPCO) was obtained as the Jordanian government took on a political risk. He said the export agreement, which will prevent export of Iranian natural gas to Jordan, was important for Israel as it could strengthen ties with Jordan.

"Securing of Israeli gas to Jordan is an Israeli strategic interest and a confidence building measure," said Mr. Gold. "Gas supply won't bring peace [though a peace treaty between Israel and Jordan was signed in 1994 and is still valid] but it has the potential to strengthen peace in the future."

Mr. Gold predicted that the Palestinian Authority will backtrack on its announcement from earlier this year, in which it cancelled an agreement to purchase natural gas from Israel, since it is lacking energy sources in its territory.

As for Europe, Mr. Gold said that European countries are interested in Israeli and Middle Eastern natural gas in order to diversify their gas resources. He said that due to the continuous turmoil in North Africa, security supply from that region was affected while Middle Eastern gas supply also can be a counterweight to the European dependency on Russian natural gas.

"If we are successful at developing Israeli gas, Cypriot gas and Egyptian gas, this quantity gives us utmost importance to European energy security," said Mr. Gold.

Mr. Gold also mentioned the U.S.'s role in the export agreements, saying that the U.S was "the main bridesmaid" in Israel's gas agreement with its neighbours.

When asked questions Israel-Egypt relations, Mr. Gold said those relations are complicated and multi-layered and that Israel has to look at the whole regional picture. He said that if Jordan does not get Israeli gas it might be supplied by Iran, when the Iranians will lay a pipeline that passes all across Iraq.

In order to clarify the gas agreement's political aspect, Mr. Gold said that "we don’t say that Israel [through gas agreements will] secure either Egypt's or Jordan's stability. If we can supply energy it is a good thing."

Ron Adam, a Foreign Ministry official, said that Jordan needs the gas in order to generate 50% of its electricity. He also said that the Director General of the Cypriot Foreign Ministry told him that the Europeans will also fund an interconnector between Cyprus and Europe following a feasibility study funded also by the Europeans.

"Natural gas is a strategic asset," said Mr. Adam. "Countries are waiting breathlessly for the framework's approval. The moment the framework's approval fails, Israel's image will be totally damaged".

Ya'acov Zalel

SOURCE

Experts Cast Doubt on Gas’ Role in Enhancing Israeli Regional Security | Haaretz

Experts Cast Doubt on Gas’ Role in Enhancing Israeli Regional Security
It emerges at Knesset hearings that government failed to alert cabinet 
and Knesset that Egypt may be on verge of second big gas discovery.

Avi Bar-Eli Dec 04, 2015 6:39 AM

Offshore Leviathan natural gas drilling site.Albatross

The debate over the strategic value of Israeli gas exports took a new turn Thursday after it emerged that the government knows that Egypt was likely to announce another significant new gas discovery, but failed to mention it in its latest assessment of the national security interests in exporting gas.

The Italian energy company Edison, which is completing a seismic survey in Mediterranean waters offshore Egypt, asked Israel to expand its study to Israel’s economic zone. But that information was never conveyed to the cabinet or the Knesset when the Foreign Ministry and National Security Council updated its national security assessment.

A second big natural gas discovery in Egypt could undermine efforts by the partners in Israel’s Tamar and Leviathan fields to export gas to the country, as well as the case that antitrust considerations should be overridden to speed development of Leviathan.

The discovery of major reserves at Egypt’s Zohr field in August has dashed hopes for exports, although last month the Egyptian company Dolphinus reached a preliminary agreement to buy Israeli gas.

News of the potentially big second discovery came as the Knesset Economics Committee held another day of deliberations over the gas framework, which spells out who can control the Tamar and Leviathan fields and other elements of Israeli gas policy. Prime Minister Benjamin Netanyahu, in his role as economy minister, plans to sign a waiver overriding antitrust concerns after the committee hearings, putting into place the element of the framework.

At Thursday’s meeting, most experts and officials called to address the national security issues cast doubt on the government’s claims that exports to Egypt or other regional markets were possible, or would enhance Israel’s security profile.

Led astray?
Zvi Mazel, a former Israeli ambassador to Cairo who revealed that information about the second field, noted that Zohr would likely begin production in 2017 and reach peak output in 2026, so that he was doubtful Egypt would be interested in Israeli gas.

“It’s clear we need to export gas, and as quickly as possible, but it is in our interest to understand what Egypt wants so that we aren’t led astray,” Mazel said. He noted that none of the agreements with Egyptian buyers had been signed or approved by the government.

“They hinted that they want to do business, but behind the scene they say they won’t do business with Israel, rather that private companies from Israel should do business with private companies from Egypt,” he said.

Dore Gold, the Foreign Ministry director general, told lawmakers that if Israel didn’t export gas to its neighbors, Iran would fill the vacuum.

“Exporting gas is an important opportunity to improve Israel’s strategic position and let us enter the exclusive club of energy exporters. It will advance Israel’s foreign relations, especially in our immediate circle, as well as vis a vis the United States and Europe,” Gold said.

He cited American impatience with the delays in having the gas framework approved and said they would deter other multinational energy companies from coming to Israel.

Gold also warned that Iran might be ready to export gas to Jordan through Iraq. MK Yael Cohen Paran (Zionist Union) questioned that assumption, noting that Islamic State posed a threat to energy infrastructure like a pipeline, but Gold said ISIS did not present a long-term threat.

But others were skeptical. Shelly Yacimovich (Zionist Union) said that since Egypt now had ample gas reserves it was a more likely exporter of gas to Jordan and that Israel’s energy reserves were far too small to make it a major player in energy markets. “Europe needs as much gas in one year as Leviathan’s entire reserves,” she said.

Jacob Perry, a Yesh Atid MK and former head of the Shin Bet security service, noted that Egyptian exports of gas to Israel were snagged by terrorist attacks on the pipeline delivering it, and then were abruptly cut off when Cairo cancelled the contract.

The preliminary agreements about gas exports to Egypt envision using that same pipeline, Perry noted. “Our experience with Egypt and the gas pipeline hasn’t been a stunning success and now they’re talking about reversing the flow through that pipeline. If we were able to export and contribute to stability, I would be in favor, but there are a few question marks here,” Perry said.

Alon Liel, a former director general at the Foreign Ministry, said political and defense issues were a more powerful force in the Middle East than business, citing the dispute between Russia and Turkey. “See how because one jet was brought down, Putin is ready to give up on $30 billion of trade with Turkey,” he said. “The agreement with Egypt isn’t strategic but economic. “

Avi Bar-Eli
Haaretz Contributor


Source: http://www.haaretz.com/israel-news/business/.premium-1.690031