Between Israel and Russia, Something is Happening

by DARLENE CASELLA July 11, 2012

It was Jerusalem, not Casablanca.  Vladimir Putin and Benjamin Netanyahu are unlikely to be the next Rick Blaine and Captain Louis Renault; however this could be the start of a beautiful friendship.

Iran's nuclear facilities or the civil war in Syria might have been the cause for Vladimir Putin's visit to Israel, but neither was.   Departing Israel, Putin said that Russia and Israel will strengthen cooperation in the fields of gas, space exploration, medicine, and pharmaceuticals. 

Days later Russia and Israel signed an offshore gas agreement.   Gazprom plans to launch an Israeli subsidiary that will help develop Israel's vast offshore gas reserves, focusing on drilling and on gas transmission.    Frederic Barnaud, director of Gazprom's LNG (liquid natural gas) Division, had held talks with Noble Energy, Delek Group, Avner Oil and Gas, Isramco, and Alon Gas Exp. regarding exploration of the huge Israeli gas fields, Leviathan and Tamar. 

Israel has depended on energy imports since its founding; except after the 1967 War when Israel gained control of the Sinai oil fields.  Israel surrendered the Sinai as part of the peace treaty with Egypt in 1979, which was signed by Prime Minister Menachem Begin and President Anwar El Sadat and witnessed by President James Carter.  Assurances from Egypt and from the United States were given regarding future energy supply.   This was done through the Arab Gas Pipeline, a natural gas pipeline which exports Egyptian natural gas to Jordan, Syria, and Lebanon; with a branch to Israel. It is believed that Sadat was later assassinated by the Muslim Brotherhood for signing this treaty.

Since the ouster of President Hosni Mubarak, the pipeline to Israel has been sabotaged 14 times. In April 2012 Egypt shut down its natural gas line to Israel, which supplied 40% of her energy needs.  

Prime Minister Benjamin Netanyahu said "We have gas reserves that will make Israel totally energy independent, not only from Egypt, but from any other source."  Israel does not want future concerns about adequate fuel supply.

Looking for participation in the development of these major offshore gas fields, Israel's Energy and water Minister Uzi Landau visits Houston.  Texas is the world leader in the development of natural gas. Prime Minister Netanyahu met with Australian Financial Services Minister Bill Shorten.  Australia has the second largest LNG sector in the world.    

Canadian Energy Companies Brownstone and Adira announced dates for exploration and drilling in three Israeli offshore sites this month.  An Italian company has signed a deal to build a $140 billion LNG station.

Discovery of sizeable offshore gas fields in the eastern Mediterranean has soared, including off the coast of Egypt.  Israel has five contiguous offshore fields:   Aditya, Ishai, Lela, Yahav, and Yoad; as well as the huge finds of Leviathan and Tamar.   Rupert Murdoch, Jacob Rothschild, former Vice President Dick Cheney, and billionaire Michael Steinhardt are all investors in Israeli oil and gas companies. Russian, Italian, French, and Malaysian companies seek licenses to drill in this area of the Mediterranean. 

Israel and Cyprus are working together with Noble Energy on the Aphrodite exploration off southern Cyprus.  The two countries plan to funnel their gas through a joint pipeline through Greece to Western Europe.  Cyprus is building a liquefaction terminal to handle the exported gas.

Regional tensions are high.   Old disputes between Israel, Lebanon, Turkey, Greece, Syria, Egypt, PA and the Gaza Strip will all come into play somewhere in the offshore drilling drama.   Lebanon disputes the maritime boundaries it previously agreed to and has petitioned the United Nations with maritime boundaries claiming some of the gas rights. Turkey is disturbed by the alliance between Israel and Cyprus.  Prime Minister Erdogan renewed a diplomatic campaign on behalf of northern Cyprus, and sent war ships to the drilling area.  He warns international companies not to seek exploration licenses in these waters, and warned Israel to stop unilaterally exploiting gas resources.  Turkey has launched its own explorations around northern Cyprus. Russia is now involved with the Israeli offshore gas fields, which should balance Turkish and other ambitions in the region.

Military threats remain.  Guerrilla raids from the north and from Palestinian Hamas militants from the south and the Lebanese government re drawing of maritime borders could all take a military twist.   The Israeli Defense Force ponders that guerrillas in boats could fire missiles, or use remote controlled flying bombs to crash into rigs, or that miniature submarines could strike from below.   Gunmen could approach platforms in civilian vessels or with divers gear and storm to kill or capture the platform crew.

The Israeli Navy boosted security, and the high command tasked a missile boat flotilla around rigs and drilling platforms. The area covers 9,000 square miles; it is larger than Israel.

Asked about the military threat to the Israeli gas platforms, a senior minister replied in understated fashion "This is only one among the Israel Defense Forces various missions.  We are more than confident that the IDF will successfully rise to it." 

Winston Churchill could not have said it better!