The recent geo-political developments in the region present major opportunities for Israel in the form of cooperative alliances in the field of energy. Turkey, Egypt and Jordan – each one for its own reasons – are all allies with regard to energy, who could help Israel evolve into a regional superpower

1. MARCH 2016 MARCH 2016 4140
nergy has always been a powerful motivation in
international relations, and the energy economies
of the Middle East have been undergoing
numerous transformations, along with fateful geo-political
developments, over the last few years. In this article I will
focus on three primary cooperative alliances that could
be of service to Israel in the future (although they are not
the only ones).
Matching Interests
Natural gas is Turkey's primary source of energy,
accounting for about 35% of all energy sources in that
country. Turkey is a massive user of natural gas and in
2014 the use of natural gas there was about 49 billion
cubic meters (BCM) – slightly higher than the scope of
use in Egypt and 6.5 times the scope of use in Israel in the
same year. Unlike Egypt and Israel, however, Turkey's local
natural gas resources are negligible, and about 99.5% of
the gas being consumed there is imported. About 85%
of the natural gas is delivered to Turkey by pipeline, while
about 15% of the gas is imported as Liquid Natural Gas
(LNG). Turkey suffers from a limited number of supply
sources and is highly dependent on a small number
of natural gas sources. This problem becomes even
more acute when one takes into account the fact that
the primary supplier of gas to Turkey is Russia, followed
by Iran, and that in fact, close to three-quarters (about
75%) of the total supply of gas to Turkey come
from Russia and Iran – two countries whose
relations with Turkey are complex and have
been plagued by numerous tensions and
controversies, especially in view of the recent
The recent geo-political developments in the region present major
opportunities for Israel in the form of cooperative alliances in the
field of energy. Turkey, Egypt and Jordan – each one for its own
reasons – are all allies with regard to energy, who could help Israel
evolve into a regional superpower
By Amir Foster
E
INVESTING ENERGY
IN THE FUTURE
Turkeyisapotentialpartner(Photo:AP)
TOWARDS
4-5.4.2016
HADERAENERGY
CONFERENCE

2. MARCH 201642
developments in Syria.
The limited number of gas supply sources
and relying on Russia and Iran as her primary
suppliers are not the only problems as far
as Turkey is concerned. The increase in
the use of natural gas in Turkey has been
phenomenal. Since the early 2000s, the use
of natural gas in Turkey has grown by about
10% on average every year. At the present
time, Turkey faces two major problems that
pertain to the primary source of energy in that
country: decentralizing the existing natural gas
sources that are problematic to Turkey and
finding additional natural gas supply sources
in order to support the growing demand.
To this day, Turkey's status as a "neutral
observer" of the developments in the global
gas markets has led it to sign unfavorable
agreements for the supply of gas, so that
the price of gas in Turkey was higher than
the prices of gas in central and western
European countries. Consequently, in order
to consolidate her status in the field of
energy, Turkey endeavored energetically
to become a transit country for natural gas
on the way to the European continent by
leveraging her strategic location as a bridge
between Asia and Europe. Over the years,
Turkey attempted, without much success,
to promote projects involving the transport
of natural gas to Europe. One of the best
known projects was the South Stream – a
mega project that should have pumped
about 63 BCM, each year, from Russia
to Bulgaria through the Black Sea. In early
2015, Gazprom announced that the project
was revoked, with the official claim being
that European regulation was too restrictive
and burdensome. In the course of 2015, the
parties resumed their negotiations regarding
the continuation of the project while shifting
the shore entrance point from Bulgaria to
Turkey. The new project was named Turk
Stream. The negotiations between Russia
and Turkey progressed slowly and were finally
discontinued pursuant to the shooting down
of the Russian fighter aircraft by Turkey in
November 2015.
"Turkey does need gas more than ever before.
It expected to be able to import gas from
Northern Iraq by 2016, but the activity of ISIS
in that area has prevented it," this statement
was made recently by Nusret Comert, a
Turkish energy expert, who added with regard
to the cooperation being devised with Israel
that "This is also the most financially profitable
deal for both sides."
Economic Opportunity from
the South
Another cooperative alliance that has been
in the making for many months now is the
alliance between Israel and Egypt. This
cooperative alliance is based primarily on the
exportation of gas to the Egyptian liquefying
facilities, but also includes the exportation of
Israeli natural gas to be used by the Egyptian
industry.
Egypt is the largest consumer of natural gas
in Africa (accounting for about 40% of all
gas consumption in that continent). In 2014,
gas consumption in Egypt amounted to 48
BCM. At present, Egypt is undergoing a
serious energy crisis and is unable to fulfill the
demand of the local market on the one hand,
while on the other hand being unable to meet
her commitments regarding the exportation
of gas through the liquefying facilities. As in
Turkey, natural gas is the primary source of
energy in Egypt, too, and in 2014 natural gas
accounted for about 50% of all of the energy
consumed in that country.
The crisis in Egypt is the outcome of unwise
business dealings opposite the international
energy corporations that operated in that
country, the unfavorable business conditions
the Egyptian government offered to those
corporations, which were reflected, among
other things, in particularly low gas prices
and in the political instability that plagued that
country over the last few years. Those factors
led to a prolonged stagnation in the Egyptian
energy economy and to the discontinuation of
development and exploration activities. In the
situation that emerged as a result, despite the
gas reserves that do exist in Egypt, no new
fields have been developed and no suitable
production-supporting infrastructures have
been built for years.
The gas fields out of which gas is currently
being produced in Egypt are undergoing
a process of rapid dwindling and the gas
production potential of those fields is
decreasing each year. The situation over there
is very serious. Since 2009, gas production
in Egypt has been declining. In 2009, Egypt
managed to produce about 64 BCM from the
gas wells that had been developed up until
then. In 2015, the same wells produced only
about 46 BCM – less than the demand of
the Egyptian local market. According to the
estimates of the international research and
consultancy group Wood Mackenzie, in 2020
those fields will be able to produce less than
half of the demand of the Egyptian market in
that year, which is expected to amount to a
little more than 60 BCM, namely – less than
30 BCM. In other words, the Egyptian market
will require at least 30 BCM just to fulfill the
local demand, and we have not mentioned the
liquefying facilities, which require an additional
amount of about 15 BCM each year. In fact,
the Egyptian production industry is currently
capable of coping with just a little more of
one third of the demand of the Egyptian local
market by 2020 (local demand + export).
Abdel Fattah el-Sisi, the Egyptian President,
fully understood the severity of the crisis
PowerplantinEgypt(Photo:AP)
"The gas fields out of which gas is currently being produced in
Egypt are undergoing a process of rapid dwindling and the gas
production potential of those fields is decreasing each year"
‫קשר‬ ‫צור‬
YIGAL LANDAU
CEO, Ratio Oil
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TZVIKA GENDELMAN
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3. MARCH 201644
and in the last year he made some very
decisive moves to extricate the Egyptian
energy economy from the crisis it had
entered. President el-Sisi doubled the prices
of gas in Egypt and improved the conditions
and terms of association with the international
energy corporations so that they would return
to Egypt to develop and explore. The results
were not late in coming. Pursuant to President
el-Sisi's moves, the international energy
corporations committed to investing tens of
billions of dollars in the development of the
Egyptian energy economy. Additionally, gas
and oil exploration activities were intensified,
which led to the discovery, last August, of a
massive new gas field – the Zohr field – in
Egypt's economic waters.
The discovery of the Zohr field is highly
important for the Egyptian energy economy,
and could – under proper development –
speed up the extrication of the Egyptian
energy economy from the serious crisis
it had entered, but it will take many years
for the Egyptian energy economy to enjoy
stability once again. According to the
data of the Wood Mackenzie group, only
half way through the next decade will the
Egyptian energy economy be able to fully
satisfy the demand of the local market – but
not the amount of gas required for export.
Apparently, the leaders of the Egyptian
government are fully aware of this issue as
they have often announced that the gas
produced from the massive new field will
be intended exclusively for local Egyptian
consumption.
Meanwhile, until the Zohr field is developed
(along with several smaller fields that are
already being developed), Egypt will be
compelled to import increasing amounts of
natural gas, mainly LNG, to fulfill the demand
of the local market, while at the same time
solving the problem of supplying gas to the
liquefying facilities – and that is where Israel
comes into the picture. At the present time,
the negotiations between Israel and Egypt
deal primarily with the exportation of natural
gas for the liquefying facilities, but also with
the exportation of Israeli gas for the Egyptian
economy itself.
The third country in our region with which
our relations may change owing to the gas
is Jordan. The energy economy in Jordan
has been significantly affected by the crisis in
Egypt and the discontinuation of the supply
of gas from Egypt to that country. Jordan
has no significant energy sources of its own
and it relies on the importation of energy for
its demands. Until 2011, Jordan had relied
on the Arab Gas Pipeline (AGP) for the
importation of gas on the scope of 3 BCM per
year to the Kingdom. Like Israel, following the
revolution in Egypt and the terrorist attacks
against the gas pipeline in the Sinai, Jordan
was compelled to acquire more costly fuels in
order to fulfill its energy needs. It is estimated
that the damage sustained by the Jordanian
economy owing to the transition to more
costly fuels amounted to about 1.8 billion
dollars per year since the supply of gas from
Egypt had been discontinued. This is a huge
amount for the Kingdom, constituting more
than 6% of that country's Gross National
Product.
Since the gas outline was endorsed by
the Israeli Government in early 2016, the
scope of contacts between Israel and
its neighbors, crying out for the supply of
natural gas, has increased significantly. A
marked improvement has been noted in the
diplomatic dialog Israel is conducting with
the Turkish government, including some talk
about normalization of the relations between
the two countries, along, naturally with
conciliatory messages being exchanged
between the two governments. Additionally,
last January the Israeli Prime Minister held
a triple meeting with the prime minister of
Greece and the president of Cyprus. The
participants in that meeting dealt primarily
with the manner in which the regional gas
resources may be harnessed for the benefit
of the relations between the three countries,
and between these and other countries in
the region as well as in Europe. During the
same month, Prime Minister Netanyahu
met with the Vice President of the USA, Joe
Biden, and a major portion of that meeting
was devoted to the new geo-political
opportunities pursuant to the development
of the Israeli gas economy, especially vis-à-
vis Turkey.
The energetic-economic cooperation
currently being devised among the countries
of the region, which is based, at the present
time, mainly on the exportation of Israeli
natural gas, could yield a long-term stabilizing
anchor between Israel and the axis of
moderate countries in our region. In view of the
awakening of the more pragmatic elements in
our region against the background of the rise
of radical Islam, regional cooperative alliances
that had never existed before could become
possible. These cooperative alliances could
make a substantial contribution to the
economy of the countries of the region as
well as to the economy of Israel. In the long
run, our region could become dominant in
the global energy arena, so we will be well
advised to manage the resource we were so
fortunate to obtain cautiously and wisely. 
AbdullahThekingofjordan(Photo:AP)
"These cooperative alliances could make a substantial con-
tribution to the economy of the countries of the region as
well as to the economy of Israel"
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