Israel seeks India’s help to explore gas reserves

Dec 11, 2014 12:00 AM

Israel wants Indian hydrocarbon companies to help it explore newfound gas reserves as it tries to build closer economic ties in the Middle East by supplying gas to neighbours Egypt, Jordan and Palestine, as well as Europe.

Israel has decided to export 40% of its current gas reserves of around 900 billion cubic metres (bcm), with more areas yet to be explored.

The ambitious plan is aimed at normalizing relationships in a region that is troubled by the long-standing Israel-Palestine conflict. This comes even as Israel prepares for a general election in March 2015 with Prime Minister Benjamin Netanyahu seeking a fourth term. “I would like to invite Indian national oil companies and private companies to come and invest in our gas reserves. We want to provide an alternative energy source to Europe and want India as a partner,” Silvan Shalom, Israel’s minister of national infrastructures, energy and water resources, said.

“Supplying gas to Jordan, Palestinian Authority and Egypt is our first choice both politically and economically. If all goes well, we plan to supply 230 bcm, to Egypt (200 bcm), Palestine (3 bcm) and Jordan (27 bcm). We prefer to sell to our neighbours,” added Ron Adam, Israel’s special envoy for energy in the ministry of foreign affairs.

A letter of intent has been signed between Israel, Egypt, Jordan and Palestine for the initial supply of a small quantity. “We are looking for other investors and this includes government-to-government negotiations,” Adam said. India imports 80% of its crude oil and 18% of its natural gas requirements.

The country trails the US, China and Russia, accounting for 4.4% of global energy consumption and has been busy tying up energy resources overseas.

Israel plans to supply gas to European Union (EU) member-countries such as Greece and Italy through Cyprus. Such an arrangement would reduce the threat that comes from having to source fuel from “other sources,” Shalom said—a reference to fuel supplies from the Russian Federation.

Earlier this year, Russia stopped supplying gas to Ukraine, which in turn affected supplies to the EU.

According to the US Energy Information Administration, “While historically Israel has been an importer of natural gas—most recently through the Arish-Ashkelon pipeline from Egypt and a very small portion through a newly installed floating and regasification terminal— the discoveries of the Tamar and Leviathan fields (among several others) should allow the country to become a significant exporter of natural gas in the next decade. There are competing proposals to develop pipelines and LNG (liquefied natural gas) infrastructure to support natural gas exports, but deliberations about how Israel will get its natural gas to market are ongoing.”

India and Israel have stepped up their engagements after the National Democratic Alliance government assumed power in May in India. In September, Prime Minister Narendra Modi met his Israeli counterpart Netanyahu in New York on the sidelines of the United Nations General Assembly, the first such meeting between the premiers of the two countries in a decade.

“With the two leaders meeting, there will be enhanced cooperation in the field of energy security. We have an excellent relationship with India and want this partnership to expand. There is an agreement on energy in the works,” Shalom added.

Mint reported on 8 December about India and Israel working towards their first agreement to cooperate in the renewable energy sector, expanding their strategic relationship to include energy security. Israel has established itself as a key partner of India in fields as varied as defence, agriculture and high technology. It is also the second largest arms supplier to India.

According to the Indian government, India-Israel trade reached $6.01 billion in 2013. The two countries are also negotiating a free trade agreement covering trade in goods and services.

Renewables vs Gas

This cooperation comes at a time when a debate is raging in Israel on the role of renewable energy in the country’s energy mix amid a fall in international crude oil prices. “I am in favour of renewable energy, at a price,” said Shalom. “While the finance ministry’s position is that renewable energy is great and fine, we don’t want to burden the consumers. We want it to become competitive. The message to the business sector is that renewable energy has got to compete with other sectors such as fossil fuel,” said Oded Distel, director at Israel’s Investment Promotion Center and Israel New Tech.

The exploration of gas is part of Israel’s strategy to broad-base its energy mix and is aimed at energy security. Of Israel’s power generation capacity of around 15,000 megawatts (MW), projects fuelled by coal and gas contribute 53.3% and 42.7%, respectively, to the energy basket.

While renewable energy sources contribute only 1% to the power generation capacity, the government’s target is to make it generate 10% of the country’s electricity by 2020.

In comparison, India’s installed power generation capacity of 254,049.5 MW, renewable power has a share of 12.47%, or 31,692.14 MW. “There needs to be a reasonable balance between the use of natural gas in Israel and renewable energy sources. This is a challenge—for the Israel policy making to create a balance,” said Orna Hozman-Bechor, director general in Israel’s ministry of national infrastructures, energy and water resources.

Israel’s renewable energy push has been driven by its historical lack of conventional hydrocarbon sources in a neighbourhood that is rich in them. Israel plans to reduce the share of oil in its transport sector by 30% by 2020 and by 60% by 2025. “While the government will not subsidize renewable energy, it will demand a certain portion of renewable energy for energy security—enough to sustain the renewable energy industry,” said Shlomo Wald, chief scientist in Israel’s ministry of national infrastructure, energy and water resources.

The view didn’t find favour with Anat Bernstein-Reich, vice-president, Israel-Asia Chamber of Commerce, and chairperson, Israel-India and Nepal Chamber of Commerce. “Israel’s stand on energy security should look beyond money. It is a strategic decision. People who have conventional energy sources are using its profits to fight us. We can use renewable energy to fight it. Oil has been funding terror groups,” said Anat, who also heads the Israel India Friendship Association. “We are a geopolitical island,” Shlomo Wald added.

Asked if falling crude oil prices could make it less viable to tap clean technology and unconventional hydrocarbon sources such as shale oil and gas, Adam, who is also the permanent representative of Israel to The International Renewable Energy Agency (IRENA) said: “We need more sources of energy. The current phenomenon doesn’t have an influence as we have a long way to go.” Shlomo Wald added: “This is a problem for many governments. We never prevent things. We only act after the things have happened. However, while we calculate the renewable energy cost, we under-calculate the value and risk of energy security. Eventually, renewable energy will prevail even as the gas prices fall down.”

The writer is in Israel as the guest of its government.

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