Should Israel export its gas find?

By Nathan Jeffay, January 6, 2011
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A Norwegian rig drilling for gas in the Barents Sea. Israel’s latest Mediterranean gas discovery is worth £60bn

A Norwegian rig drilling for gas in the Barents Sea. Israel’s latest Mediterranean gas discovery is worth £60bn

Israel's latest natural gas find totals 16 trillion cubic feet, the company leading drilling, Noble Energy, has announced.

The past two years have seen the discovery of two massive offshore energy deposits in the Mediterranean Sea.

The first was the Tamar natural gas field, thought to hold 6 trillion cubic feet of gas, where production is expected to begin in 2012.

The second was Leviathan, where exploratory drilling has just taken place, leading to the 16 trillion cubic feet estimate. This quantity of gas is worth around £60 billion in today's market.

Gas should be used to bring about energy security

Noble Energy rushed to raise a possibility that generations of Israelis have dreamed of. "This discovery has the potential to position Israel as a natural gas exporting nation," David L Stover, the Texas-based company's president and chief operating officer said in a statement, adding that for nearly a year it has been exploring the best methods for exporting the gas.

But some experts in Israel believe that exporting would be short-sighted. Brenda Shaffer, director of the energy policy management program at the University of Haifa and one of the Middle East's most prominent energy researchers, asked rhetorically: "Why get to a point where 20 years down the line you are looking again for energy imports?"

She says that talk of exporting is mistaken in two respects, and argues that the gas should be used instead to bring about "energy security" in Israel and reduce dependency on global fuel markets.

Firstly, it is based on the premise that there will be spare gas to export as, if it was kept for domestic use only, it would last for many decades. But she says that, logically, given that Israel currently derives half of its electricity from coal which it imports, Israel will eliminate coal and use its gas at a faster rate.

Secondly, "I would not say that you have an automatic buyer for this." Most of the world's gas markets are currently in "oversupply", and unlike with oil, with which companies can sell every barrel to a different buyer, transportations methods for gas mean that it requires a long-term commitment from buyers.

Dr Shaffer sees such a deal as unlikely in the current financial climate. One alternative is to liquefy and bottle the gas so that it can be sold on the open market - but this process is expensive.

As the debate grows over gas, the Israeli government is implementing a plan to increase energy self sufficiency through another of the country's natural resources - sun. It has begun to abolish the red tape that has stopped solar energy projects from getting off the ground.

"Europe has snowstorms and we have sun," Prime Minister Benjamin Netanyahu declared at a cabinet meeting. "Similarly, ours is a technology-rich country, including in solar technology. We are among the most advanced in the world. And the paradox is that when we try to join our technology with the sun, we cannot make progress due to our bureaucracy."

Jonathan Cohen, an immigrant from London who recently signed the first purchase agreement for renewable energy with the Israeli Electric Corporation in the organisation's history, said that it was a "hard uphill haul" as the many government offices he dealt with had no procedures for dealing with solar energy purchases.

Mr Cohen, CEO of Arava Power, said he believes that the government's new plan will solve many problems he encountered, and help promote its target of making 10 per cent of Israel's energy sustainable by 2020.

Last updated: 1:54pm, January 6 2011