Israel may be the biblical land of milk and honey, but the Jewish nation has remained woefully short of natural resources, especially oil and natural gas. In fact, even former prime minister Golda Meir is said to have famously joked that Moses led Israelites through the barren desert for 40 years to a land that promised them virtually nothing, not even oil. Though the country’s economic and military achievements have been the envy of many a neighboring oil-rich Arab nation, Israel’s thirst for energy has remained unquenched.
The geopolitical significance of being self-sufficient in energy cannot be overstated, as Israel learned the hard way during the Arab oil embargo of 1973 much like its bigger ally, the U.S. Since then, energy independence became the defining factor of Israel’s government policy.
However, the Middle East nation’s energy security scene seems all set to get a makeover. If shale rocks proved to be the game-changer for the energy-hungry United States, Israel seems to have gone deep into the Mediterranean to unearth huge reserves of natural gas. In fact, Israel’s sudden surge in energy reserves draws an easy parallel with the recent boom in America. Israel, true to gritty resolve, persevered in its exploration efforts for decades with no trace of reserves until it struck gold in the Tamar gas field located 90 km off the coast in 2009. And there has been no looking back for the country’s energy exploration sector since then.
Israel may be the closest ally of America in the Middle East, but the cooperation stretches far beyond. For a nation that had not seen a trace of oil for decades, technical know-how was hard to come by. But thanks to resourceful individuals such as Gideon Tadmor, who is widely regarded as the torchbearer of Israel’s natural gas industry, digging for energy picked up steam in the late 90s. Tadmor’s trips to Houston, Texas in search of a partner resulted in a tie-up with a small Oklahoma company called Samedan Oil Corp, which later became known as Noble Energy. In fact, it was a consortium, comprised of Tadmor’s firm Avner Oil & Gas, Delek Energy, and Noble, along with two other companies, which were behind the Tamar discovery.
Still, the Tamar field was just the harbinger of what has turned out to be nothing short of an energy revolution in Israel. If Tamar had reserves of 10 trillion cubic feet of natural gas, the Leviathan field, which was discovered in December 2010, enjoyed the unique distinction of being the world’s largest deep water gas reserves found in the past decade. What’s more, according to a U.S. Geological Survey report quoted in the Financial Times, the Levantine Basin, the subsea area that runs from Egypt up to Turkey, has the potential to produce more than 120 trillion cubic feet of natural gas. Israeli has the added advantage that its waters comprise 40% of this sea area.
The Leviathan natural gas field, which is jointly developed by a U.S.-Israeli consortium, received a boost recently when Australia’s Woodside Petroleum successfully won a bid to acquire a 30% stake in the project, outsmarting the likes of Russia’s Gazprom, China’s National Offshore Oil Corporation, and France’s Total S.A. The scramble for a slice of Israel’s gas is not without reason. According to a Reuters report, the natural gas generated from this field could be ready for export by the end of the decade. Moreover, the project’s geographical proximity to the Suez Canal and big natural gas markets such as Italy could cater to both European and Asian markets, the news report said.
The sudden gas glut, sometimes likened by Israeli politicians to manna from heaven, has taken the government by surprise. Though it will be a while before the gas revenues will be added to the government kitty, a sovereign wealth fund has already been set up to manage the inflows. The natural gas bonanza could not have come at a more opportune time for Israel’s innovation-driven economy. It seems natural gas, not milk and honey, is the toast of a resurgent, modern Israeli economy.
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