Israel to Fast-Track Offshore Natural Gas Projects
Noble Energy plans to increase its presence in Israel as the Texan company expects to approve at least one natural gas development by the end of 2016. Gas is expected to flow from those fields three to four years after Noble has made a final investment decision according to a statement made by Noble´s Chief Executive Officer David Stover in a conference call with analysts and investors on Monday.
Noble Energy has made significant discoveries off the Israeli coast with the Leviathan field estimated at up to 22 trillion cubic feet (Tcf) of natural gas, and the Tamar field, supplying natural gas to the Israeli market since 2013, estimated at 10 Tcf of natural gas.
The resignation of Israel's economy minister Aryeh Deri cleared the way for the Israeli government to approve the natural gas framework, an essential move for companies invested in Israeli waters to begin to reap the benefits of their natural gas explorations.
The plan had been held up by a dispute between the partners in Israel’s largest offshore gas fields and Israel’s Antitrust Authority who accused them of forming a cartel that would likely distort competition in Israel’s domestic natural gas market. The plan would allow the partners to retain their stakes in the Tamar and Leviathan fields on the condition they sold shares in the Tamar gas fields and two smaller fields offshore Israel. The ministry will be taken over by Israel’s prime minister Benjamin Netanyahu in an attempt to fast-track the plan to develop offshore natural gas fields.
At the end of October, Eni’s CEO Claudio Descalzi met with Prime Minister Benjamin Netanyahu and Energy and Water Minister Yuval Steinitz in Jerusalem to discuss potential investment opportunities in Israel and the joint development of natural gas in the Eastern Mediterranean through joint export infrastructure deals with Cyprus, Israel and Egypt.
Eni’s presence in the Eastern Mediterranean was reinforced by the company's giant natural gas discovery in Egypt end of August. The Italian giant discovered the Zohr field estimated at up to 30 Tcf of natural gas in the Shorouk block in Egyptian waters in close vicinity to Cypriot waters. Eni also holds licences to explore gas in Blocks 2, 3 and 9 of Cyprus' Exclusive Economic Zone.
The meeting confirms Israel’s keenness to position itself as an attractive destination for international investors.
The discovery off Egypt’s coast has triggered fears that Israel may be losing its share of the regional market despite repeated statements by Egyptian officials that Egypt will still be looking to import gas from Israel and Cyprus to meet its desperate need for natural gas as an interim solution before its newly found gas flows into the Egyptian market.
Israel and Cyprus are planning to use Egypt’s liquefaction plants to reach export markets. It remains uncertain at this stage whether Egypt’s newly discovered gas will compete with Israeli gas hindering the possibility for Israeli gas to be processed in Egypt for liquefaction and export to far-reaching destinations. The meeting between Eni and Netanyahu signals that a collaboration between Eni, Egypt and Israel, and perhaps also Cyprus, is possible if Israel manages to overcome domestic political rivalries and effectively moves forward towards the fast and steady development of its riches.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat