Turkey and Israel 'Close to Gas Deal'

Israel and Turkey are on the verge of a energy deal, according to press reports, testifying to a remarkable warming of diplomatic and economic relations since 2010 when ten Turkish protesters were killed in an attempt to land boats in the Israeli-occupied Gaza Strip.

On May 5, Israeli Energy Minister Yuval Steinitz said that the country will soon submit a proposal to Noble and Delek for the development of the Leviathan gas field and to allow exports to Egypt and Turkey, Bloomberg News reported. Turkey wants to diversify its natural gas resources in order to reduce its current dependency on Russian natural gas. Russia currently provides 55% of the Turkey's 50bn m³ annual gas imports.

Ankara is planning to consume half of Leviathan gas supplies from 2020, via a proposed pipeline to Turkey. Also, the Israeli gas can be shipped to Europe from Turkey in the second phase.

Earlier this month, Zorlu Holding, the Turkish conglomerate, signaled its plans to increase energy investments in Israel via joint ventures. "We have strong connections in Israel. The shipping of Israeli gas to Turkey is 'big business'. As our partners call us to invest in Israel more, we may be in the possible consortium to ship natural gas to Turkey, in the near future," Zorlu CEO Omer Yungul was quoted as saying. The value of the trade would be over $8bn for the project, he added. Zorlu has operations in the Israeli electricty sector, with Adeltech, Eliat-Ashkelon in Dorad Energy.

Also, Turkish energy companies have plans to set up a buyer consortium to ship Israeli gas to Europe via Turkey. "The first Israeli gas may reach to Turkey in the next five years," Turcas CEO Batu Aksoy said, quoted in Turkey's Hurriyet newspaper. "Each consortium member will take some gas in this plan. At least 15 companies have contacted us so far and voiced their intention to become a part of this planned consortium," he said.

Meanwhile, Turkish energy industry experts predict that a cabinet reshuffle in Turkey -- which is imminent following Turkish Prime Minister Ahmet Davutoglu's resignation -- may hasten the process of reaching the energy deal. Sources also said that current Turkish Energy Minister Berat Albayrak, who is a son-in-law of President Recep Tayyip Erdogan, may be appointed Prime Minister which could speed up the deal.

On the Israeli side, Israel's government will allow energy companies to develop Leviathan gas field, which may soon result to gas export agreements with Egypt and Turkey.

"We are very close to resuming a diplomatic relationship with Turkey. Turkey is a huge market for gas," Steinitz told Bloomberg in an interview in May 5. The minister predicted that an agreement with Turkey would be signed in the coming weeks. "We have bridged 80% to 90% percent of the gaps. They need our gas and we need this market. I think we will reach a resolution with Turkey in weeks -- but even if it takes months, gas projects take years," Steinitz was quoted as saying.

With estimated reserves of 622bn m³, Leviathan will cost at least $6 billion to develop for a production start-up in 2018-2020. Texas-based Noble Energy and Israel’s Delek Group control the Leviathan field as well as the smaller Tamar field.

Murat Basboga