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Lure of Israel's gas may dampen Turkish ire

Nov. 14, 2013 at 3:13 PM   |   Comments

TEL AVIV, Israel, Nov. 14 (UPI) -- Israel is on the cusp of becoming a natural gas exporter and key energy power in the Middle East, a move that could produce significant geopolitical changes in a region beset by turmoil.

That includes a new alliance with Turkey, which seems to be moving toward setting aside its political differences with the Jewish state, just as it is doing with Iraq's oil-rich Kurds, in the interest of achieving its ambition to become the main energy broker in the region.

Israel is now considering its options for exporting gas from its Tamar field, which began production March 30, and the larger but still undeveloped Leviathan field, which is due to come onstream in 2015.

Between them these fields contain an estimated 30 trillion cubic feet of gas. Israel has set aside 40 percent of its gas production for export, expected to earn $50 billion in the next 20 years.

A pipeline under the eastern Mediterranean from Leviathan, which contains an estimated 16 tcf of gas, to Turkey is one of the more ambitious options.

If it comes off it could pump 105.9 billion cubic feet of gas a year to Turkey, which has no energy resources.

Eventually, that could reach 353 bcf annually in the second half of the decade using the pipeline, which will cost $2 billion to $3 billion to construct.

There are other options, including linking up with neighboring Cyprus, currently in the throes of exploring for gas off its south coast. That could involve building a $12 billion liquefied natural gas facility on Cyprus to handle joint gas exports to Europe and beyond.

Noble Energy of Texas and Israeli partner Delek group, which discovered the Israeli fields, are also drilling off Cyprus and they've made substantial finds.

But a deal with Turkey's still widely seen as a frontrunner, despite Ankara's rift with Israel over the May 30, 2010, storming of a Turkish flotilla of ships seeking to run Israel's economic blockade of the Hamas-ruled Gaza Strip in which nine Turks were killed by Israeli troops.

Turkish conglomerate Zorlu Energy disclosed two weeks ago it wants a 15-year contract to buy Israeli gas from Leviathan.

Zorlu, one of Turkey's biggest conglomerates, has been negotiating with Delek. Zorlu already has a foothold in Israel, with a 25 percent stake in Dorage Energy, which is building the Jewish state's largest independent power station.

Turkish Prime Minister Recep Tayyip Erdogan has stressed there can be no commercial tie-up with Israel until it pays compensation for the Turks killed in 2010.

But his energy minister, Taner Yildiz, made no bones about it last week: "Turkey is interested in Israeli gas."

Insiders in both countries are betting Erdogan's ambition to transform strategically placed Turkey into the region's energy hub for Russia, the Caspian and the Mediterranean will override his quarrel with Israel, which until 2010 was Turkey's strategic military and intelligence ally, and his personal feud with Prime Minister Binyamin Netanyahu.

They note that the Erdogan has green-lighted Turkey's move into Iraqi Kurdistan to secure access to its estimated 45 billion barrels of oil and large reserves of gas through a network of overland pipelines that will eventually carry 2 million barrels of oil a day into Turkey, despite Ankara's traditional distrust of the Kurds.

Turkey's Kurds have waged a separatist war for autonomy since 1984. But now he's seeking a peace agreement while his dealings with the Iraqi Kurds encourages them in their pursuit of their own independence from Baghdad.

The mooted pipeline from Israel to Turkey, which could eventually feed gas to Europe, which is struggling to break its reliance on Russia, will require inter-government cooperation to secure a long-term commercial deal.

Publicly, the Islamist Erdogan is still sniping at Israel. In August, he claimed Netanyahu's government was behind the July 3 military overthrow of Islamist Egyptian President Mohamed Morsi.

In October, there were reports Turkey had betrayed an Israeli intelligence operation involving agents in Iran.

But analysts believe the economic benefits of a gas deal with Israel, like the tie-up with the Iraqi Kurds, mean that pragmatism will overcome politics and prejudice.

"It's no secret Erdogan has bold ambitions for his country's regional and international standing," Istanbul analyst Joseph Dana said.

"Traditional adversaries, like Israel and the Kurds of northern Iraq, are now the backbone of Turkey's strategic future."

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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