Energy has always been the weak link in Israel’s thriving economy. Decades of digging and drilling yielded practically no hydrocarbons at all. Israel was forced to spend 5% of its GDP buying fuel from suppliers that did not have its interests at heart, and were often unreliable. At one point for instance, Israel purchased 40% of its natural gas from Egypt. But the pipeline across the Sinai has been bombed so many times there was often not enough time between explosions to get the gas flowing again. Post-Mubarak Egypt desperately needs the money to replace lost tourism revenue, but hatred of Israel trumps all.
The first brightening of this bleak picture came in 1998, when offshore drilling in Israel’s Mediterranean waters got under way. In 2000, a consortium led by Noble Energy of Houston struck commercial quantities of natural gas off the southern coast, west of Ashdod. By 2004, the Mari B field was in full production, with reserves of nearly 1 trillion cubic feet of gas. This remains the only currently producing offshore well in Israel.
But Noble Energy was convinced there must be bigger reserves waiting in deeper waters, and in 2009, diligent exploration paid off in a big way. The Tamar field, with 9 trillion cubic feet of gas, was the biggest offshore gas field found anywhere in the world that year. And the next year, Noble Energy struck it even richer with the 16 trillion cubic foot Leviathan field, further west of Haifa. That was the biggest offshore find of the decade. Together, these discoveries opened up entirely new possibilities. The Tamar field, with enough gas to supply all of Israel’s needs for decades, offered energy security, and the Leviathan field offered energy for export and billions of dollars a year in potential revenues.
Gas is scheduled to start flowing from Tamar in 2013 and from Leviathan in 2016. With the same consortium operating Mari B and Tamar and Leviathan, the Israeli government was very concerned about giving one group of companies a monopoly over its offshore gas. This monopoly has now been broken by other companies who’ve found rich pickings in the sea off central Israel. A three-dimensional seismographic survey of the Myra and Sarah fields northwest of Netanya and southeast of Leviathan has revealed 6.5 trillion cubic feet of gas waiting to be developed by a consortium led by the Israel Land Development Company.
Modiin Energy has a controlling interest in the Gabriella field in shallow water not far west of Tel Aviv, with an estimated 3.56 trillion cubic feet of gas, and the Yam Hadera field west of Hadera, with an estimated 1.4 trillion cubic feet.
Adira Energy, a Canadian company, is developing the Yitzhak field southwest of Netanya, with an estimated 989 billion cubic feet. And ATP Oil & Gas of Houston has partnered with Isramco Negev to develop the Shimshon field, with a best estimate of 2.3 trillion cubic feet.
Of course, Nobel Energy hasn’t rested on its laurels after Leviathan. It has identified 12 more prospects with 20 trillion cubic feet of potential gas in the territory covered by its licenses. And all of the fields mentioned have substantial quantities of oil waiting to be developed as well. The best estimate for the Gabriella field alone is 277 million barrels of oil.
Getting the most out of all these discoveries will take not just technical expertise and money, but strategic thinking and sound diplomacy as well. And that is what Israel has been practicing, with Greece and Cyprus in particular.
Israel has carefully cultivated its relations with Greece since early in 2010. Progress began with an unlikely but warm personal relationship between Prime Ministers Netanyahu and Papandreou. It intensified after Turkish-Israeli relations fell into a deep-freeze following the Mavi Marmara incident, and after the scope of the Leviathan discovery became clear. Face-to-face meetings between officials in Athens and Jerusalem, business and tourism delegations, sharing of intelligence, and joint exercises between the Israeli and Greek air forces all bore fruit when the Greek Coast Guard brought the 2011 version of the Gaza flotilla to a complete halt, and Israel tirelessly lobbied the EU to extend a helping hand to Greece in the face of its financial crisis.