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Gazprom 'mulls joining Israel's gas boom'

March 2, 2012 at 3:40 PM   |   Comments

TEL AVIV, Israel, March 2 (UPI) -- Russia's Gazprom, the world's biggest energy conglomerate, is reportedly sending top executives to Israel to discuss a partnership in the country's offshore gas fields, a move likely to heighten tension over an energy bonanza in the eastern Mediterranean.

Ynet, the English-language Web site of Israel's Yediot Ahronot mass-circulation Hebrew daily, said a Gazprom team has scheduled meetings with the consortium that made major strikes in 2009-10 and expects to make more.

This consists of the Noble Energy Inc. of Houston and Israel's Delek Group headed by tycoon Yitzhak Tshuva.

The Russians reportedly are interested in a partnership in the Leviathan field, the biggest gas zone found so far in Israel's exclusive economic zone. It contains an estimated 16 trillion cubic feet of gas. The next biggest field is Tamar, which contains an estimated 8 tcf.

Officials in Israeli Prime Minister Binyamin Netanyahu's office say the discoveries could contain double the volume currently listed. They said the known reserves are worth $100 billion-$130 billion.

Israel's gas fields account for only a fraction of the energy riches believed to lie in the Levant Basin that stretches from Syria through Lebanon, Israel, the Gaza Strip and Egypt and includes the waters of the island of Cyprus.

The U.S. Geological Service reported in 2010 that the region contains around 122 tcf of natural gas as well as 1.7 billion barrels of oil.

Ynet said the team from Gazprom, the Russian gas monopoly, which produces 94 percent of Russia's gas, was headed by the company's managing director of its global liquefied natural gas division, Frederic Barnaud.

Gazprom officials visited Israel in 2011 and in two days of talks examined three partnerships options in the Leviathan field.

According to Ynet, the first involves a partnership in the Leviathan license, contributing to the development costs estimated at $6 billion-$8 billion, a deal that would probably accelerate development and production.

The second option involves buying Leviathan gas to sell in the Middle East and Far East, where Gazprom wants to consolidate its position to compensate for anticipated losses in recession-hit Europe.

Under the third, Gazprom would become a license partner involved in production and export through liquefaction terminals and shared exports.

Russia has gas deposits of 1,680 tcf, the world's largest, with Gazprom controlling 25 percent of the planet's known gas reserves.

Acquiring an interest in Israel's boom could be lucrative for Gazprom and extend its international reach. But Gazprom could also be buying into a hornet's nest of energy conflicts between regional rivals that could seriously impede development of gas fields that could transform the economy of the eastern Mediterranean.

Turkey, determined to become the region's paramount power and at odds with Moscow over Syria, wouldn't look kindly on Russia muscling into its backyard on such a strategic level.

Such a development could further complicate disputes triggered between the region's states by the energy bonanza, heightening tensions from long-running conflicts in the volatile zone that until the big strikes off Israel was considered poor in natural resources.

Lebanon is at odds with Israel, with which it is technically still at war. Beirut claims Leviathan extends into its waters north of the Jewish state.

Cyprus has been divided since Turkey invaded in 1974 and seized the northern part of the island, which it proclaimed the Turkish Republic of Northern Cyprus and is recognized only by Ankara.

The island's southern sector remains under the control of Greek Cypriots whose government is recognized internationally.

Turkey, which broke a long-running strategic alliance with Israel in 2010, insists the Greek Cypriots have no authority to conduct a gas exploration program.

Israel and Cyprus, whose EEZs adjoin one another, said they plan to cooperate on gas production, jointly exporting to energy-hungry Europe via Greece.

Noble Energy, which is drilling off Cyprus, says it has found reserves initially estimated at 6.65 tcf-10.6 tcf, reportedly enough to supply the island's domestic needs for two centuries.

The gas boom has meant a strategic geopolitical realignment in the eastern Mediterranean, with Israel seeking to base combat aircraft in the Greek sector of Cyprus to counter Turkey's deployment of F-16 fighters in the TRNC.

Israel has stepped up military cooperation with Greece, Turkey's ancient rival, while expansionist Turkey has vowed to send in its navy if Ankara feels threatened by Greek Cypriot exploration.

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