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Israel oil find sharpens Med energy scrap

  |   March 15, 2012 at 3:40 PM
TEL AVIV, Israel, March 15 (UPI) -- The discovery of potential oil reserves of 232 million barrels, plus another natural gas field off Israel's coast couldn't have come at a better time for the Jewish state as Egypt's Islamist-dominated parliament calls for cutting off gas exports to its eastern neighbor.

But the strikes announced Tuesday also up the stakes in a simmering energy conflict in the volatile eastern Mediterranean involving Israel, Cyprus, Egypt, Greece and Turkey and their feuds.

Israel's Modlin Energy Partnership and Canada's Adira Energy say they found the fields, named Gabriella and Yitzhak, in shallow water 15 miles off Tel Aviv. Seismic surveys indicated the fields could yield up to 232.3 million barrels of oil, 128.4 million from Gabriella alone, the Globes business daily reported.

The fields also contain some 1.8 trillion cubic feet of natural gas.

These discoveries are relatively small compared to the 2009-10 strikes made by Noble Energy Corp. of Houston, and its partner, the Delek Group headed by Israeli tycoon Yitzhak Tshuva.

Leviathan, the biggest, which lies off Haifa, contains an estimated 20 tcf and nearby Tamar 9 tcf.

Noble Energy's also been drilling in Block 12, known the Aphrodite field, the southernmost of Cyprus' 12 exploration zones and which adjoins Leviathan. Noble estimated in late 2011 that Block 12 contained 7 tcf, but has revised that to 5.1 tcf, with a probability of 50 percent, after further investigation of its complex geological structure.

Even so, that still makes it the third largest field found in the Levant Basin after Leviathan and Tamar. Nobel estimates Leviathan also holds 1.7 billion barrels of oil.

The Delek-Noble partnership wants to raise $250 million on Israel's capital markets over the next few months to pay for developing its gas fields even though the Israel Electric Corp. agreed in January to buy gas from Tamar for an estimated $8 billion over 15 years to fuel electricity generation.

Israel and the Greek Cypriot government in Nicosia plan to pool their resources and export gas, either through underwater pipelines to the energy-hungry European Union, which desperately wants to end its reliance on Russian gas, or as tanker-borne liquefied natural gas.

This infuriates Turkey, particularly since its Islamist government broke a long-standing strategic alliance with Israel in May 2010, evoking its historical rivalry with the Greeks.

The energy bonanza in the eastern Mediterranean is swelling against the backdrop of that smoldering feud, as well as the more explosive Arab-Israeli conflict that could well escalate anew.

Neighboring Egypt's newly empowered Islamists have called for cutting off vital exports of Egyptian gas to the Jewish state.

They could go further and threaten to abrogate the landmark 1979 peace treaty Egypt signed with Israel in March 1979, the first between the Jewish state and its Arab foes.

That's been the linchpin of Israeli, Egyptian and U.S. strategic policy in the region and scrapping the treaty would further isolate Israel at a time when it's locked in confrontation with Iran over its alleged plans to acquire nuclear weapons.

Lebanon, Israel's northern neighbor also plans to develop offshore fields and claims Leviathan encroaches into its waters. Both sides mutter darkly about using force.

Lebanon and Israel are technically in a state of war and fought a 34-day conflict in 2006.

Cyprus was divided in 1974 when Turkey invaded after a short-lived coup by supporters of uniting the Greek-majority island northwest of Israel with mainland Greece.

The Turks conquered the northern one-third of the island and proclaimed it the Turkish Republic of Northern Cyprus. But only Ankara recognizes it.

The Nicosia government, which controls the southern part of the island, is internationally recognized and is part of the European Union.

Turkey bitterly opposes Greek Cypriot plans for the gas fields Nicosia expects to find offshore and their burgeoning economic, political and -- more worrisome -- military links with Israel.

Ankara warns it will use its considerable military force if it feels threatened and insists that no exploration around Cyprus can take place until the Turkish minority is reconciled with its old enemies in the south -- a prospect that right now seems extremely remote.

The stakes are already high. The U.S. Geological Survey reported in 2011 that the eastern Mediterranean contains 123 tcf of gas and 2 billion barrels of oil.

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