Israel Rumoured to be Planning Pipeline to Jordan
Israel is rumoured to be planning the building of a pipeline that would connect it to Jordan through the Dead Sea. The 15 kilometre pipeline is expected to be completed by 2016 according to Bloomberg. The project confirms Noble Energy’s CEO November statement that Israel will start by exporting its natural gas to immediate neighbours before considering reaching further markets such as Europe and East-Asia. The decision to sell natural gas to regional customers is motivated by the fact such deals require simpler and lower cost infrastructure. Pipelines that would connect Israel to its immediate neighbours would be relatively cheap to construct and Israel could also make use of existing infrastructures.
In October 2013, the Israeli High Court of Justice ratified a decision made by the Benjamin Netanyahu led government back in June 2013 to export approximately 40% of the natural gas found offshore Israel. The decision came as a relief to investors involved in exploration activities in Israel’s exclusive economic zone and to partisans of the theory that Israel should monetize its riches and bring in billions of Shekels that would revive the economy and allow further drilling in the country’s waters.
Israel’s abundant recent natural gas finds, with the 10 tcf Tamar field that came online in March 2013 and the 19 Tcf Leviathan field expected to start supplying natural gas in 2017, will allow the country to achieve a long awaited energy independence and would end its history of natural gas dependency. Producing its own natural gas will also enable Israel to increase the share of natural gas in its energy portfolio mix.
Selling the natural gas has tremendous economic benefits. The discoveries were very opportune given Jordan, Egypt and the Palestinian Authority’s urgent needs for natural gas. Egypt’s own production should have been sufficient to supply the country with the needed amounts of natural gas. However, export obligations, halted exploration activities and an increased demand are forcing the country to import natural gas. Egypt was Israel’s main natural gas supplier for years until the flow of natural gas between the two countries was disrupted as a result of several attacks to the pipeline in the aftermath of Mubarak’s toppling. Israel and Egypt are reportedly discussing a new gas deal that would this time allow Israel to sell gas to Egypt.
Another agreement was inked last week between the Leviathan partners and the Palestine Power Generation for the export of 4.75 bcm of gas over 20 years. The deal is the first of its kind to allow the sales of the Leviathan natural gas to an immediate neighbour. The pipeline project to Jordan completes Israel’s strategy of exploring the regional market before adventuring itself in further seas. Jordan’s long reliance on imported Egyptian natural natural has put the kingdom in a vulnerable situation that caused a severe energy crisis. An energy deal with Israel could be a solution for the Kingdom. Israeli natural gas would be a cheaper alternative for Jordan that has recently been forced to import expensive fuel products to make up for its shortfall of natural gas while Jordan develops its indigenous projects to develop its own energy resources. Such an agreement remains however politically sensitive.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat