Israel Should Avoid Turkey, Include Cyprus in Gas Export Projects
By Ariel Ben Solomon, October 7, 2016
BESA Center Perspectives Paper No. 370

EXECUTIVE SUMMARY: Israel should rule out building a natural gas pipeline to
Islamist Turkey because of the political risk involved. It should instead
consider using LNG technology for export through Cyprus. Although this would
be expensive, it would be a less risky and more durable option over the long
term. This should be in addition to exporting to Jordan and possibly to
Egypt.

As Israel begins closing deals for its natural gas, it should avoid linking
itself to any expensive long-term pipeline deal with Turkey at the expense
of allies Cyprus, Greece, or even Egypt.

Notwithstanding the recent easing of tensions between the two countries,
Israel cannot trust Turkish President Recep Tayyip Erdoğan’s Islamist regime
as a linchpin in its natural gas export strategy.

A crisis could erupt at any moment that might cause Erdoğan, an erratic
anti-Semite, to stop the gas from flowing, essentially holding Israel
hostage. The trigger could be a new war with Hamas-ruled Gaza, which is
allied with Turkey, or a general escalation in violence with the
Palestinians, or any of a host of other unexpected incidents. The
deterioration of the already cool relationship is only a matter of time.

The recent improvement in ties between Israel and Turkey must be viewed
within the context of the poor relations Ankara had with Russia and other
states at the time, and should not be viewed as reflecting any real change
in Erdoğan’s attitude toward Israel.

Turkey experienced a crisis in its relations with Russia after Turkey’s air
force downed a Russian fighter jet near its border with Syria last November.
The crisis had Turkey scrambling, as it depends on Russia for over half its
gas needs and over 12% of its oil. Turkey also has tense relations with the
US and the EU, as well as with various Arab states that oppose its support
for Islamists in their countries.

The subsequent rapprochement between Turkey and Russia changes the picture,
and will give Erdoğan a freer hand to dispose of the Israel relationship as
he sees fit. In addition, there are various other countries from which
Turkey can receive gas, including Russia and Iran. Turkey would therefore
have leverage in any gas deal with Israel.

The proposed gas pipeline to Turkey would cost around US$5 billion and take
seven to eight years to build. Other options for gas export are Egypt and
Greece.

Though Cairo is friendly with Jerusalem, Egypt suffers from political
instability and terrorism. Even without those issues, Egypt is not an ideal
option, because it has its own gas reserves and will not need Israel’s gas
in the long run. And while Greece could be part of a plan to export to
Europe, this would involve Cyprus as a way-station.

On September 26, investors in Israel’s large Leviathan natural gas field
closed a $10 billion deal to export gas to Jordan, though production is
still a few years away. A pipeline between the two countries is under
construction.

However, the deal with Jordan still leaves much gas to be sold elsewhere.

This leaves what appears to be the safer but more expensive option of
developing a liquefied natural gas (LNG) terminal in Cyprus. LNG technology
converts natural gas to liquid to make transport easier.

Israel would be wise to focus its long-term gas strategy on Cyprus. The
Aphrodite gas field south of the Cyprus coast and Israel’s nearby Leviathan
gas field could turn Cyprus into a hub for further export of gas to Europe
and Asia. An LNG facility would need to be built on a coastline, and it has
been estimated that building one in Cyprus would cost upwards of $20
billion.

Asked about the possibility of Israel’s building its own LNG facility in
Eilat or anywhere else on the Israeli coast, an industry source in Israel
dealing with LNG told the author that this will not happen because
environmentalists and their political supporters would block it. The
opportunity to use LNG thus appears to be narrowed down to using the
existing facility in Egypt, building a new one in Cyprus, or creating a
floating one at sea.

“Cyprus is the safest bet,” the source said. “It is stable for the long term
and if Lebanon finds gas, it could be transported by pipeline to Cyprus.”

The other idea under discussion is a gas pipeline that would go from Israel
to Cyprus and then on to Greece, but some experts see this as unrealistic. A
report in the Israeli business newspaper Globes stated in April that while
officials from the three countries have discussed this option, it would
require at least 1,100 kilometers of pipeline, some of which would pass
through depths of 3,000 meters, making it a complex and expensive option.

Another industry insider, questioned about the chances of building an LNG
facility in Cyprus, responded that it depends on politics and on the
building up of feed gas and customers. He added that there is also “a price
issue, and if the math works and politics isn’t an obstacle, then a project
gets financing.”

Some still see Egypt as a viable option. George Papadopoulos, a foreign
policy advisor to US presidential candidate Donald Trump, says that Egypt
“faces its worst power crisis in decades due to long-term inefficiencies in
the gas sector and is desperate for imported gas until its own legacy
production ramps back up.” Egypt is weighing importing gas from Israel and
Cyprus.

“The Israeli Leviathan and Tamar gas fields, along with the Egyptian Zohr
and Cypriot Aphrodite, have the potential to be the linchpins that transform
the region into an integrated energy zone,” he said.

Accordingly, a strategic relationship between Greece, Cyprus, Israel, and
Egypt could involve energy cooperation around a prospective Cyprus hub.
These countries are all ideologically opposed to Islamist Turkey’s agenda,
and Greece and Cyprus have their own historical reasons for preferring
cooperation with Israel over Turkey.
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Ariel Ben Solomon is a freelance writer on the Middle East and a PhD
Candidate in Middle East Studies at Bar-Ilan University. He is former Middle
East correspondent for The Jerusalem Post.
BESA Center Perspectives Papers are published through the generosity of the
Greg Rosshandler Family