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.
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. “
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