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Israel, Turkey Explore Energy Links 27 mars 2013

Posted by Acturca in Energy / Energie, Middle East / Moyen Orient, Turkey / Turquie.
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The Wall Street Journal (USA) March 27, 2013, p. A12

By Joshua Mitnick, Tel Aviv

Israel’s apology to Turkey over a deadly 2010 raid will boost cooperation over Syria’s civil war, but it also has a compelling economic incentive: the possible export of billions of dollars of Israeli natural gas to Turkey and beyond, say analysts and officials.

Quiet contacts between Israel and Turkey over gas cooperation have been going on in recent months, but both sides knew nothing could progress before the dispute over the raid was resolved, said Alon Liel, a former Israeli envoy to Turkey with knowledge of the talks.

« Even before the reconciliation, there were talks about the export of gas through Turkey. Now that there is reconciliation, this is possible, » he said. « Cyprus is collapsing economically, and Israel understood it could not realize its plans for export through Cyprus. »

Israeli Prime Minister Benjamin Netanyahu apologized to Turkish Prime Minister Recep Tayyip Erdogan on Friday for the bungled 2010 raid by Israeli naval commandos on the Mavi Marmara ship as it tried to breach Israel’s naval blockade of Gaza to deliver aid. Eight Turkish activists and one Turkish-American were killed.

Mr. Netanyahu said the need to coordinate with Turkey on handling fallout from Syria’s civil war was the main reason he dropped his refusal to apologize.

But another reason is emerging. Turkey’s fast-growing economy is the lowest-cost export destination for energy discovered off the Israeli coast in recent years. Such a deal could result in a supply contract for as much as $4 billion a year, an Israeli analyst said.

Despite the broken ties, which led to a halt in Israeli defense-supply contracts with Turkey and a nose-dive in Israeli tourism to Turkey, commerce between the two countries has continued. Turkey has become an even more attractive destination in the wake of the Cyprus crisis, which is clouding plans for cooperation between Cyprus and Israel on exploration in Mediterranean offshore fields and the construction of a liquefied natural gas plant for export.

For Turkey, hooking up a gas link to Israel’s offshore reserves would help diversify sources — and potentially lower energy costs — for an economy in need of more energy for its surging growth. Turkish demand for natural gas is expected to double by 2025, according to energy analysts.

In the long term, the Mediterranean reserves could feed a pipeline Turkey wants to build linking gas fields in Asia to Europe.

Officials on both sides sought to tamp down expectations of any imminent energy agreement, though they confirmed that a normalization of ties would put the possibility of a natural-gas deal on the bilateral agenda.

Turkish officials stressed that the Israeli apology wasn’t directly connected to the potential for tapping Turkey’s soaring gas revenue, but conceded that a rapprochement could unlock big potential for collaboration on hydrocarbon exploitation in the Eastern Mediterranean.

« Israel decided to meet our conditions and apologize; we took a principled stand on this issue. . . . But now with the normalization it will be a particularly viable option to transport Israeli gas to Turkey, » a senior Turkish official said.

Following the initial reconciliation announcement Friday, the countries still need to implement an agreement for Israel to compensate families of the nine passengers killed. The countries then need to reappoint and dispatch ambassadors, a key element of normalization.

Though the countries were close allies in the 1990s, few analysts in Israel expect the recent reconciliation to restore the same level of collaboration soon.

An Israeli official said that if the reconciliation were to « turn into a much more positive vector, there are many potential areas of for cooperation, including the area of energy, but we’re not there yet. »

An executive with Israel’s Delek Group, a joint owner of the Israeli offshore gas fields with Houston-based Noble Energy Inc., declined to comment, saying speculation of exports to Turkey is « premature. »

Given the recent estrangement in Israeli-Turkish ties and the collapse of an Egypt-Israel natural-gas supply deal, any agreement will have to account for enhanced political risk, said Amit Mor, an Israeli energy expert.

He estimates the cost of transporting natural gas via a pipeline to Turkey could be one-fifth that of supplying via Cyprus, which wants to build an expensive plant for LNG shipments. It will also take less time to build up the infrastructure, he said.

« Exporting to Turkey is no doubt going to be the most economic option for Israel, » said Mr. Mor, chief executive of consulting firm Eco Energy Ltd. « There is a major interest to export the gas as soon as possible. The reconciliation with Turkey enables putting this option on the map. »

Joe Parkinson contributed to this article.


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