Expected Restoration of Turkey Ties Paves Way for Natural Gas Deal

After five-year rift, normalization of Ankara-Jerusalem relations could yield high profit for both countries.

Expectations that Turkey and Israel will restore normal relations after a five-year rift have raised hopes of speedy progress in talks to import Israeli natural gas, potentially a multibillion dollar project.

Israel’s ties with Turkey soured in 2010 when Israeli commandoes killed 10 Turkish activists when storming the Mavi Marmara, a ship in a convoy seeking to break a naval blockade of Gaza.

Turkey, largely dependent on imports for its energy needs, has ramped up efforts to find new sources of natural gas due to worsening tensions with Russia, after Turkish forces shot down a Russian jet near the Turkish border last month.

Israeli officials said late Thursday a deal to normalize ties came after high-level bilateral talks in Switzerland. Turkish officials said a final deal had yet to be sealed, but, given the progress on key topics, it would not be too long.

Even during the rift, plans to build a pipeline and import natural gas from Israel’s vast Leviathan field in the eastern Mediterranean Sea were never shelved, a Turkish source close to the talks told Reuters. “Even the political authorities did not wish the talks to be suspended. We knew that once the political issue was overcome, the rest of the process would move swiftly,” the source said.

Israeli officials largely welcomed the deal, but said Israel should stick to its guns when it comes to security and limiting the activity of some members of Hamas living in Turkey. “The expected agreement, which has yet to be concluded, gives us, on the one hand, what we demanded – a heavy limitation on Hamas activity in Turkey,” MK Zeev Elkin (Likud) told Army Radio. “We should not fold. We should not concede. We should stay firm on our interests.”

Although the lifting of the Gaza blockade, one of Turkish President Recep Tayyip Erdogan’s three conditions to normalize ties, is unlikely given that Israel has said the policy is vital for security against Islamist militants, a senior Turkish official said progress has been made on the issue. “There is a breakthrough regarding the blockade,” the Turkish official said. “We are nearing a final deal in talks with Israel. We don’t think it will be long.”

The news of a potential restoration of ties between the two countries came a day after Prime Minister Benjamin Netanyahu signed a deal giving long-awaited approval for the development of the offshore Leviathan project.

Leviathan, with estimated reserves of 622 billion cubic meters, will cost at least $6 billion to develop. It is meant to begin production in 2018-2020.

Turkish firms have long been negotiating with Israeli counterparts on a pipeline to carry Leviathan’s gas. Shares in Zorlu Energy, one of those firms with energy assets in Israel, rallied toward its upper daily trading limit.

Both Zorlu Energy and a consortium of Turkish firms have been in talks with Israel over the price, potential route of a pipeline, partnership structure, as well as how to sell the gas, the Turkish source said. “There’s a potential of around 30 bcm gas resource there, of which Turkey could buy 8 to 10 bcm,” the source said, adding that such a project would require up to $3 billion in investment.