Offshore gas reserves are a game-changer
Amid the doom-and-gloom reporting that so often concerns Israel and the region – the rise of Islamism hostile to the Jewish state, the threat of a nuclear Iran, etc. – there appeared late last month a 3,000-word article in Britain’s Financial Times Magazine that casts a completely different light on Israel’s prospects.
Under the heading “Field of dreams,” FT’s Jerusalem bureau chief, Tobias Buck, wrote about how Israel’s relatively recent discoveries of huge gas reserves in the Mediterranean Sea stand to transform the country from a resource-deficient to a resource-abundant powerhouse, amounting to an “economic revolution.”
The Tamar field, discovered in 2009, is estimated to have reserves of about 10 trillion cubic feet of natural gas, while the nearby Leviathan field, found the following year, is substantially larger still – “the largest deep-water gas reservoir found anywhere in the world over the past decade,” Buck notes.
“The two fields, together with a string of smaller discoveries,” he writes, “will cover Israel’s domestic demand for gas for at least the next 25 years and still leave hundreds of billions of cubic feet for sale abroad. The government take from the gas fields alone is forecast to reach at least $140 billion over the next three decades – a staggering sum for a relatively small economy such as Israel’s.”
These discoveries didn’t just come about overnight. The process was a long one fraught with all sorts of risk and uncertainty. But it took daring visionary Israelis such as lawyer-turned-entrepreneur Gideon Tadmor, “widely regarded as the pioneer of Israel’s natural gas industry,” to transform a vision into a reality.
As Buck explains, Tadmor was convinced that since gas fields had been found in Egypt, similar fields should exist elsewhere in the region. Tadmor “felt that the geological trend would not stop at the political border – and should extend into Israeli waters,” Buck writes.
Tadmor was correct, but the process was arduous, starting with onshore drilling in 1991 (which was unsuccessful) and then moving over many years, and with mounting financial pressures, farther and farther offshore from the Israeli coast.
What made the process even more difficult was the inability of Tadmor’s company, Avner Oil & Gas, to get funding from large European and American energy firms. Tadmor says they didn’t want to risk their ventures in Arab countries by investing in Israel.
He finally found an investor in Samedan Oil, an Oklahoma-based exploration company that was too small to have to worry about alienating Arab interests. The investment paid off, big time. Samedan went on to become Noble Energy “and emerge alongside Avner and Delek, an Israeli conglomerate, as one of the three leading players in the Israeli natural gas boom.”
This boom (whose proceeds are yet to be realized) does not come without its own risks, since other countries in the region, such as Lebanon and Turkey, are challenging Israel’s finds with territorial claims of their own.
Turkey, which occupies northern Cyprus, is contesting Cyprus’ dealing with Israel in the Mediterranean, and in the case of Lebanon, there’s the additional threat of terrorism from Hezbollah.
Israel believes it can deal with these threats and argues that all surrounding parties (including the Palestinians in Gaza) stand to benefit from the economic windfall. Given the profound economic malaise gripping the Middle East, this would only make sense. If only.
There’s also an important Canadian component to Israel’s ventures.
As reported in the Financial Post in late June, Canada and Israel signed an energy agreement that will allow for more co-operation and collaboration on energy issues. For example, Israel stands to benefit from Canadian expertise in developing yet another major find in Israel: the Shfela Basin southwest of Jerusalem, containing about 250 billion barrels of shale oil, the third-largest such reserves in the world.
This is but a glimpse of what can be an exciting, prosperous future – and not only for Israel.