Israel-Turkey gas pipeline an option for Russia-wary Europe -sources

The production platform of Leviathan natural gas field is seen in the Mediterranean Sea, off the coast of Haifa, northern Israel June 9, 2021. REUTERS/Amir Cohen

ANKARA/JERUSALEM, March 29 (Reuters) – A Turkey-Israel gas pipeline is being discussed behind the scenes as one of Europe’s alternatives to Russian energy supplies, but it will take complicated maneuvering to reach any deal, government and industry officials in both countries say.

The idea, first conceived years ago, is to build a subsea pipeline from Turkey to Israel’s largest offshore natural gas field, Leviathan. Gas would flow to Turkey and on to southern European neighbors looking to diversify away from Russia.

Turkish President Tayyip Erdogan said last week that gas cooperation was “one of the most important steps we can take together for bilateral ties,” and told reporters he was ready to send top ministers to Israel to revive the pipeline idea that has lingered for years.

A senior Turkish official told Reuters talks have continued since Israeli President Isaac Herzog visited Ankara earlier this month and “concrete decisions” could follow in coming months on a proposed route and participating entities.

Industry officials are more circumspect, however, saying production restraints and geopolitics could leave the plan dead in the water.

The Leviathan field already supplies Israel, Jordan and Egypt. Its owners – Chevron (CVX.N) and Israeli firms NewMed Energy and Ratio Oil (RATIp.TA) – plan to crank up production from 12 to 21 billion cubic meters (BCM) a year.

By comparison, the European Union imported 155 billion cubic meters of Russian gas last year, covering close to 40% of its consumption.

Much of the extra gas output will be liquified and exported on ships to Europe or the Far East, according to NewMed. Its chief executive said last month Turkey could become a destination too, but needed to put “skin in the game” and commit to building the pipeline.

Asked about talks with Turkey, the Leviathan partners declined to comment.

Israeli Energy Minister Karine Elharrar told Ynet news on Sunday many considerations had yet to be discussed, including the finances.

“It needs to be found economically feasible, which is not something self-evident,” she said.

ENERGY BRIDGE

Israel and Turkey are looking to put a decade of diplomatic impasses, usually over Israeli-Palestinian issues, behind them. Energy partnership could be key, especially after Russian invasion of Ukraine made Europe more determined to find alternatives to its energy supplies.

“There has been a recent rapprochement with Israel and we want its gas to transit Turkey en route to Europe,” said another Turkish official. “Israel is looking positively on this, some talks have been held and there is a will to do it.”

Turkey consumes about 50 billion cubic meters of natural gas a year and imports nearly all of that, most through pipelines from Russia, Iran and Azerbaijan. It is well placed as a transport hub in the region where energy politics can be heated.

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“Turkey is of great interest, for its domestic consumption as well as a channel to countries in southern Europe,” said a senior official in the Israeli gas sector.

The problem, the official said, is that there were already two proposed routes for the extra supplies from Leviathan: via existing LNG plants in Egypt or a planned floating LNG facility.

“If Turkey responds quickly then it may be a third alternative,” the official said.

The pipeline would run 500-550 km and cost up to 1.5 billion to build, according to Israeli officials, making it more manageable than the 6 billion euro pipeline EastMed proposed to connect Israel with Cyprus, Greece and Italy.

However, any subsea line would need to cross waters of either Cyprus, which Ankara does not recognize, or Syria, with which Ankara has no diplomatic relations and has backed rebels fighting the government in Damascus.

This could complicate construction and financing if Turkey had a direct stake in the pipeline, said Gokhan Yardim, a Turkish gas industry consultant who worked on the assessment of the possible pipeline over two decades.

Two previous assessments were based on 8 to 10 billion cubic meter gas flows, and anything less may not be feasible, Yardim said.

Reporting by Orhan Coskun in Ankara and Ari Rabinovitch in Jerusalem; Additional reporting by Can Sezer in Istanbul; Editing by Jonathan Spicer and Tomasz Janowski

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