The Battle over Israel’s Newfound Riches - Part II

Tuesday, September 25, 2012 |  Elizabeth Blade

This is part two of a four-part series on Israel's difficulties in developing its new-found natural resources. If you have not done so already, we recommend first reading The Battle over Israel’s Newfound Riches - Part I

The answer to this question was suggested by Dr. Dmitry Maryasis, a senior research associate at the Department of Israeli Studies, Russian Academy of Sciences. “Israel doesn’t have enough experience in the field of gas exploration. Although the US might be a leading oil expert, it is still in its infancy when it comes to gas. Russia, on the contrary, has much to offer. It boasts vast expertise and the necessary infrastructure able to turn this project from fiction to reality,” he told Israel Today, conceding that the implementation of the project without Russian involvement was also possible.

Despite the fact that Russia’s energy titan Gazrpom – just like its western partners – has interests in various Arab states, it won’t hesitate to enter the Israeli market, given the fact that Russia lost its previous achievements in the Arab world (including staunch support of the street and multi-million dollar deals in energy and infrastructure projects).

Still determined to maintain its positions in the Middle East, Russia might be seeking to forge an economic alliance with Israel that could develop into a political union.

For this reason, a group of Gazprom officials travelled to Tel Aviv in March, followed by President Vladimir Putin’s visit in June, who allegedly raised the issue of a joint Israeli-Russian cooperation.

According to Natural Gas Europe.com, a website dedicated to providing “essential daily reading on European gas matters” the Russian titan is looking at three main options. “Buying a stake in the consortium; buying Leviathan gas for sales in the Middle East, away from Gazprom’s core market; and cooperating in Liquefied Natural Gas (LNG) production and export,” said the report, adding that Gazprom’s trading subsidiary has already signed an initial agreement on marketing LNG from the nearby Tamar field and was reportedly eyeing with particular interest the Leviathan.

However, Russia’s ambitions are viewed with suspicion in some Israeli circles that fear Moscow would use gas as a leverage tool to promote its own agenda.

Dr. Avinoam Idan from the energy studies program at the University of Haifa’s management school said that for a company that made $158 billion in 2011, accession to the Israeli market was more a matter of political interests, not economic ones. “If we’re not careful, we could find ourselves in a situation similar to that of the European countries that allowed Gazprom to control production, transportation and distribution to end consumers,” he was quoted by Haaretz as saying. “Trying to attract [Gazprom] here while others are trying to distance themselves from it is very problematic in terms of Israel’s national interests,” he added, referring to EU attempts to minimize its dependency on Gazprom that supplies about a quarter of European gas.

This is part II of a four-part series on Israel's difficulties in developing its new-found natural resources. Check back for the continuation.

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