Israel: More Gas Likely to be Found Near the Tamar field

Delek, Avner and Noble, the partners in Israel’s 10 Tcf Tamar field, announced Tuesday that more gas is likely to be found in a nearby field. Previous estimates indicated that as much as 0.7 Tcf could be found in the new Tamar Southwest field. Prior to this announcement, Noble said that the development of the giant 18 Tcf Leviathan field had been pushed back a year due to the lengthy process of formulating an export policy. Gas was expected to flow from the Leviathan to supply Israel’s domestic market by 2016 with exports possible as early as 2018. Only last month did Israel’s High Court of Justice reject the appeal against gas exports confirming that Israel will be exporting 40% of its gas. While the uncertainty over the export quota was cleared after months of speculation, it remained uncertain where the gas will be going to.

Israel might have shifted export strategies. Talks about building a pipeline to Europe via Turkey, opting for a local LNG or using the Cyprus’ LNG facility currently underway were originally on the table. Today, what we are sure of is that Israel is eyeing its immediate neighbours before considering possible routes to further markets, in Europe or in Asia. The shift has been mostly instigated by the realisation of the local needs of the region. Noble’s CEO Charles Davidson has mentioned Egypt and Jordan as potential customers highlighting the two countries’ need of energy and their quest to source natural gas at lower prices. The existing pipeline infrastructure facilitates such a trade and contains the costs involved. Jordan’s energy crisis began when the disruptions in the flow of natural gas from Egypt to Jordan started in the aftermath of the 2011 Arab Spring. Davidson added that a floating LNG or the use of an LNG in Cyprus are still possible even though less trains will be involved.

The neighbouring Cypriot island has the ambition of becoming a regional energy hub. Earlier this week, the chairman of the Cyprus National Hydrocarbons company Charles Ellinas pointed out that Cyprus had to act quickly and without delay to ensure its entry to the energy markets before an eventual drop in natural gas prices by 2020. Cyprus is considering both Asian and European markets. Ellinas added that Cyprus could constitute an additional source of natural gas to a Europe dominated by Russian supply and looking to diversify its sources. Cyprus’ Aphrodite field in Block 12 could contain between 3.6 and 6 tcf according to the preliminary results of Noble’s appraisal well. Although such quantities alone do not commercially justify the multi-billion LNG project, Noble considered them as encouraging further explorations. ENI, Kogas and Total will also be commencing exploration activities off Cyprus’ shores in the coming year and have expressed interest in joining the project should they encounter additional quantities of natural gas.

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.  Email Karen on karen.ayat@gmail.com. Follow her on Twitter: @karenayat