Israel gas deal with Egypt could thaw international relations

In what could be considered a historic trade move, the Israeli government has opened the door to exporting natural gas resources to Egypt.

However, there are several obstacles to the deal and it's likely that a finalized trade agreement will take some time.

A Reuters press release from December 2015 said the Israeli government is planning to sell 5 billion cubic meters of gas to Egypt over a period of seven years.

"After years of delay and debate, we are starting to move forward and to position Israel as a regional natural gas power," Israeli Energy Minister Yuval Steinitz said in the press statement.

However, reports earlier this year said part of what is holding up the deal is a fine of nearly $2 billion that an international arbitrator awarded to Israel because of the shattering of a prior agreement in which Egypt sold gas to Israel. Reports said that deal collapsed in 2012 after militants attacked a gas pipeline in the Sinai.

A May 2016 piece in Bloomberg News said their are other obstacles, including Israel's inability to build a regulatory framework for its national natural gas operations.

Experts also note how there will have to be specific trade resolution agreements built into the plan in order to prevent future scenarios such as what has occurred in the region during the last several years.

Federico Gaon, a columnist on Middle Eastern affairs who holds a degree in international relations from the University of Palermo specializing in Middle Eastern legal affairs, discussed how the discovery of new natural gas fields on the Israeli coast are leading to certain kinds of geopolitical deals in an interview with the Gulf News Journal.

“The discovery of natural gas near Israel's coast is a meaningful game-changer in the Middle East geopolitical arena.” Gaon said. “Once they are exploited, the Leviatan and Tamar fields will turn Israel into a large energy producer. Seemingly, energy commodities have a huge leverage in the diplomatic arena. Thus, it will be easier for Israel to induce its neighbors to establish ‘friendlier’ ties.”

Gaon also referred to a thaw between Israel and Turkey as another example of this possible detente.

“From Turkey's side, this move is clearly motivated by the prospect of diversifying her gas imports.” Gaon said, citing Turkey’s reliance on Russia for over half of its gas imports. Last year, he said, Turkey’s relationship with its Russian producer became strained.
“Turkish establishment realized it had to come about with a more diversified energy basket.” Gaon said. “Then comes Israel.”

Gaon suggested this kind of energy diplomacy may actually lead to more Gulf Coast countries recognizing Israel formally in the community of nations.

“Perhaps the gas will prove a motive sufficient enough for neighboring countries to finally recognize Israel's existence.” Gaon said. “Business is always business, and Israel brings promising opportunities. For starters, it is well known that the Gulf monarchies already have a de facto line of communication with Jerusalem. Some high-ranking officials have held meetings with Israeli counterparts.”

Organizations in this Story

Israel Ministry of National Infrastructure, Energy and Water Resources

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