Israeli-Turkish gas pipeline on the horizon

Israel in its drive to export its natural gas could see the construction of a gas pipeline between Israel and Turkey next year.

“We think the construction phase for a pipeline to transport Israeli gas to Turkey could begin in the second half of 2015,” a Turkish energy official said.

This latest development could seriously impact South Cyprus’ plans to build a liquified natural gas plant (LNG)The South’s gas discoveries are less than originally estimated, making the building of an LNG facility economically unviable.

A Greek Cypriot LNG export plant was due to deliver at least 5 million tonnes a year to Europe and Asia, allowing Europe to reduce its growing dependency on Russia, which has become of particular concern since the crisis in Ukraine cast a Cold War chill over East-West relations.

Israel’s change of marketing strategy will undermine investments in an LNG plant as South Cyprus’ current gas finds alone are not sufficient to justify building a processing plant.

“If Israel has really ditched Cyprus as a partner to develop the region’s gas resources, then we (Cyprus) really do have to find quite a lot more gas if we want to become a viable exporter, and that would inevitably throw our plans back by several years,” said one source involved in developing Greek Cyprus’s gas reserves.

“High-level negotiations on resolving political issues, and lower-level negotiations aimed at making progress on energy have always been held,” said a senior Turkish energy official. “Normalisation on the relations will pave the way for investment and cooperation on energy.”

Attempts at reconciliation between Turkey and Israel initiated by the US after the Mavi Mara affair could be enhanced by the possibility of gas deals between the two countries.

A separate yet-to-be-built pipeline linking Europe with the Caspian through Turkey in 2019 could eventually also open up a new market for Israeli gas in Western Europe.

The projected 25-year supply deal would stabilise Turkey-Israel ties and boost economic links, while Turkish sanctions against Israel would be lifted and ambassadors reinstated, the Turkish energy official said.

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