Why the natural gas trade is good for Turkey-Israel ties

Why the natural gas trade is good for Turkey-Israel ties

Turkey and Israel have experienced a deep freeze in their diplomatic relations for nearly six years. Now that the two Middle Eastern powers are seeking to improve their ties, the natural gas trade could help. Here are five reasons why.

1) Israel could be an excellent supplier for Turkey

Israel’s proven natural gas reserves currently stand at around 900 billion cubic meters (bcm). Although that figure is miniscule compared to the reserves of gas giants Russia (34 trillion cm), Iran (32 tcm), and Qatar (25 tcm), Israeli natural gas offers unique advantages for Turkey.

Since 2009, Israel has granted licenses to the U.S. company Noble Energy to explore and process the natural gas under the Levant Basin in the eastern Mediterranean. The gas from the Tamar and Leviathan fields could easily reach Turkey via underwater pipelines, and Tel Aviv’s relatively simple bureaucratic procedures also make it an attractive partner for Ankara. 

Although Ankara recently signed liquefied natural gas (LNG) deals with Qatar, shipping gas from the Persian Gulf is not cost-effective. Likewise, even though Iran has the second largest gas reserves in the world, its infrastructure is still underdeveloped. It will be a while before more Iranian gas can reach Turkish consumers.

As for Russia, Turkey already buys 55 percent of its natural gas from its northern neighbor. But because Moscow is known to use energy as a weapon, and given the ongoing tensions in Turkish-Russian relations, Ankara needs a closer and more reliable source of energy. As some of its purchase agreements with Russia expire in 2021-22 and Turkey faces an ever-growing demand for imported natural gas, Israel could serve as a viable alternative.

2) Turkey could be a great customer for Israel

Turkey currently consumes about 48 bcm of natural gas every year. As a resource-poor industrial power, it relies on energy imports. But unlike Israel’s war- and turmoil-stricken Arab neighbors, Turkey’s economic prospects are good. A 20- to 25-year agreement to transport 16 bcm of gas into Turkey every year would bring a stable source of revenue into Israeli coffers.

3) Turkey is a reliable transit hub for future Israeli exports to Europe

Aside from buying gas from Israel to meet its own energy needs, Turkey could also serve as a transit hub for Israeli gas exports to European markets. 

Ankara has successfully organized two other major transnational pipeline projects – Blue Stream, which currently brings 16 bcm of Russian gas into Turkey, and the Trans-Anatolian Gas Pipeline (TANAP), which will deliver 16 bcm of Azerbaijani gas to European markets by 2018. 

The Turks also have the technical, legal, and institutional know-how to build these pipelines. Since 1985, Turkey has connected 74 of its 81 provinces to a national pipeline network – no small feat for a country with a population of more than 75 million people.

At the moment, Noble Energy plans to turn Israeli gas into liquefied natural gas (LNG) at terminals in Israel and Jordan and ship them to European markets. But if future prospecting efforts reveal new natural gas fields in the Mediterranean, the safest and most profitable route for Israeli gas exports into Europe would be through pipelines in Turkey.

4) Politics have never affected Turkish-Israeli trade 

Despite troubles in their political relations and the barbs their leaders exchange from time to time, commerce between Turkey and Israel continues to grow, thanks in part to a long-standing free trade agreement. Turkish-Israeli bilateral trade nearly doubled from $3 billion in 2010 to $5.6 billion in 2014. This suggests that, for a critical project such as natural gas trade, Ankara and Tel Aviv could set aside political differences for mutual economic benefit.  

5) U.S. support could lead to long-term stability

The natural gas trade is good for Turkey and Israel but even better for the United States. Currently, Moscow is angling to stay as the indispensable energy supplier of Europe. Thus, it would be in Washington’s interest to back its two regional allies and deny Moscow an opportunity to make further inroads into Europe, the eastern Mediterranean and the Middle East.

U.S. support could take two forms. First, U.S. companies could help develop Israel’s upstream and midstream natural gas infrastructure, which would serve as a perfect complement to Turkey’s downstream capabilities. Second, the U.S. could leverage its naval presence to support its allies in any disputes that could arise with Russia over natural gas exploration and extraction rights in contested areas of the eastern Mediterranean. 

*Volkan Emre is an energy analyst and founder of the World Energy Security Analysis Platform (WESAP) and Natural Gas Turkey initiative.

**Barın Kayaoğlu is an independent political analyst and business consultant in Washington, where he writes and comments for US and international media outlets.