Israel and Turkey Seek to Shield Natural Gas Ties From Politics

  • Governments working on deal that would provide such insurance
  • Israel could pump gas to Turkey in 3 years: energy ministry

Israel and Turkey are working to eliminate a major obstacle to natural gas deals: their own fractious history.

The two governments are working on a framework for the export of Israeli natural gas to Turkey that would protect contracts between companies if diplomatic ties break down, Israeli Energy Ministry Director-General Shaul Meridor said in an interview in Jerusalem. With such a shield in place, gas could begin flowing from Israeli waters to Turkey as soon as 2019, he said.

“For banks to eventually finance such a project they will have to know that no matter what happens between the countries politically, the business side will be protected,” he said.

The prospect of energy ties helped the countries patch up a six-year rift over a deadly Israeli raid on a Turkish ship that sought to breach Israel’s blockade of the Hamas-ruled Gaza Strip. Israel was looking for export markets, while Turkey sought to bolster its status as an energy hub and diversify away from Russian gas. But while companies are in talks to sign gas deals, concerns linger that diplomatic relations could deteriorate.

Pipeline Dream

Partners in the Leviathan field, Israel’s biggest natural gas reservoir, are negotiating to export about 10 billion cubic meters of gas per year to Turkey, Bloomberg reported in March. Through its units, billionaire Yitzchak Teshuva’s Delek Group Ltd. owns a 45.3 percent stake in Leviathan, while Houston, Texas-based Noble Energy Inc. holds 39.7 percent. Ratio Oil Exploration 1992 LP owns the rest.

A pipeline from Israel to Turkey would have to traverse the territorial waters of Cyprus, but Meridor signaled that its construction wouldn’t hinge on the fate of talks to reunify the island, whose north Turkey occupied in 1974. He declined to go into details.

“We have a plan for every scenario,” he said. “We’re talking with the Cypriots and of course with the Turks about it. I’m pretty sure we’ll find a way for the pipeline to go through Cypriot economic waters to Turkey.”

Israel is seeking to attract global energy companies to bid for new licenses after gas development was delayed by years of domestic debates on everything from resource taxes to export quotas. Meridor, who recently met with executives of large energy companies in Houston, said there’s growing interest now that the disputes have been overcome, but declined to give names.

“We’re back in business,” he said. “We lost five to six years years in discussions inside the government with the current companies. But we’re there now. The Israeli regime isn’t going to change now, we’re very clear about that.”

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