Newly discovered natural gas reserves in the eastern Mediterranean are reshaping the geopolitical landscape in the Middle East. For a country like Israel, which has struggled to find cheap and reliable sources of energy since its independence in 1948, the implications are massive. Israel’s international isolation during its first few decades in existence bound its energy and national security considerations tightly together. Because the oil-rich states of the Arabian Peninsula and North Africa were in a state of war with Israel, their policies were deliberately designed to choke off the country’s energy supplies and in turn threaten its very survival. While Israel has responded to this threat by diversifying its energy supplies and investing in renewable sources, recent discoveries of natural gas deposits off its coastal shores have the potential to radically redefine the energy security equation for Israel and its neighbours.
Consider the sheer scale of just two of the biggest natural gas fields discovered to date in proportion to the size of Israel’s economy. The Tamar and Leviathan fields were discovered in January 2009 and June 2010, containing approximately 240 billion cubic metres (BCM) and 460 BCM of natural gas, respectively. While these natural gas discoveries are substantial, undiscovered reserves are expected to be even bigger. The U.S. Geological Survey estimates the Levant Basin in the Eastern Mediterranean to contain nearly 3.45 trillion cubic metres of recoverable natural gas. As Israel currently consumes less than 10 BCM per year, it could easily meet the demands of its own energy markets for the rest of the 21st century and still export sizeable quantities abroad for sale in foreign markets.
The implications for the region’s political and economic relationships are dramatic. Not only could Israel become a net exporter of energy for the first time in its history, but market forces could bring Arab and Israeli interests closer than the “high politics” of diplomacy ever did. Since Egypt in 1979 and Jordan in 1994 are the only two Arab states to sign peace treaties with Israel, their growing energy relationships with Israel are indicative of the mutual benefits that energy collaboration can yield. Even the Palestinian Authority, the sole legitimate and internationally recognized representative of the Palestinian people since the Oslo Accords of 1993, has developed an energy infrastructure increasingly connected to, networked with, and reliant on Israel.
Since 2005 Egypt had been selling Israel natural gas extracted from the same fields conquered by Israel in 1967 and traded for peace in 1979. These supplies were halted in 2012 after at least a dozen attacks on pipelines bound for Israel (and Jordan, interestingly enough) were carried out by militant jihadists operating in the Sinai Peninsula and empowered by the fall of Egyptian President Hosni Mubarak in early 2011. Now, after years of political turmoil and economic instability wreaking havoc on Egypt’s public institutions and energy infrastructure, authorities are struggling to deal with chronic power outages. Due to Egypt’s forecasted shortage of natural gas needs for electricity production, it is now negotiating a new contract with Israel in which Egypt will pay four times what it charged Israel for natural gas just a few years ago. This is just one example of the new reality unfolding in the Middle East’s political economy of energy.
In February 2014 the Hashemite Kingdom of Jordan signed a landmark deal worth $500 million to import natural gas from the Tamar field for 15 years, with the flow set to begin in 2016. This deal is expected to evolve into a $30 billion energy partnership in which Israel would become Jordan’s primary gas supplier. The Palestinian Authority, which already imports electricity from Israel for domestic consumption, has also indicated interest in exploring further energy cooperation initiatives. The Palestine Power Generation Company signed a $1.2 billion deal in January 2014 with a consortium of private U.S. and Israeli companies to buy natural gas from the Leviathan field. What these examples indicate is that Egyptians, Jordanians and Palestinians have all embarked on further energy interdependence with Israel since the discovery of significant offshore natural gas reserves.
Furthermore, these cases all demonstrate the potential for mutually beneficial energy and economic relationships between Israel and its Arab neighbours. When political and diplomatic ties have been normalized and peaceful relations replace the perpetual state of Arab-Israeli war, all parties involved can benefit. The same promise exists for Lebanon and Syria, whose civil war continues to destabilize the region and prevent energy exploration and development in other parts of the eastern Mediterranean. Non-Arab regional players like Cyprus (both Greek and Turkish have rival claims) and Turkey are both working to demarcate their maritime borders with Israel and sign agreements to supply their domestic markets, with the added possibility of shipping natural gas further north to Europe. This latter option would upset Russia’s near monopoly on natural gas production and westward exportation into Europe.
Too little mind has been paid to the energy politics of the Arab-Israeli conflict to date. When attention has been focused on this issue, it typically revolves around themes like the resource curse of oil-rich regimes and rentier economies in authoritarian environments. Even before huge reserves of untapped natural gas were discovered in the Eastern Mediterranean, however, a new research agenda has been crystallizing at the intersection of energy politics and environmental security. As the regional balance of power shifts in Israel’s favour, energy-dependent states in the Middle East and beyond would do well to pay more attention to natural gas-related developments in this part of the world.
Featured photo by Helix Energy Solutions Group.
