Israel's Gas Dream – The End Is Nigh

In the five years since the discovery of the Tamar and Leviathan natural gas fields off the coast of Israel, the Israeli energy discourse has focused on questions like what to do with the gas, how much of it to export and to whom, and what the fairest distribution of profits would be among the gas partners, headed by Noble Energy and Delek Energy, and the Israeli public.

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But after years of delays and billions of dollars spent, a new and increasingly likely scenario should be considered – the premature – and tragic – death of the Israeli gas dream. I alluded to this option in an August 2013 article titled "Israel's Zero Gas Game" in which I warned that Israel has become so busy dividing the pie that its leaders forgot it must first be baked and that due to the failure of the government to present a clear vision for the country's energy sector, articulate the rights and responsibilities of foreign investors and most importantly set rules and stick to them, "the gas will be left in the ground and the startup nation will be more worthy of the title 'shutdown nation'." Perhaps that sounded crazy at the time. Today, with the decision of the Israeli Anti-Trust Authority to revoke an arrangement permitting Noble-Delek partners to develop Leviathan, declaring them a cartel - a move that will require the separation of Leviathan from Tamar and the sale of Leviathan to a new partnership, effectively postponing the development of Leviathan indefinitely - the scenario of "zero gas" - and perhaps even the withdrawal of Noble from Israel altogether - should be considered seriously.

In deciding to enter Israel Noble has taken a huge financial, regulatory and geopolitical risk. However, the size of the discoveries, the potential of finding oil under the gas layers and the doubling of the company's market capitalization made the move easy to justify to its shareholders. But the Texas company, the only international energy company that was willing to set foot in Israel, was welcomed with no red carpet. Instead it was ushered through a Via Dolorosa of bureaucratic torture which eliminated any chance for gas production before the end of 2018 – ten years from the beginning of exploration. A ten year lead time from discovery to production is a lot to ask of a publicly traded company which has to satisfy quarterly thinking and profit hungry shareholders. But in light of Noble's recent stock performance, dropping from $80 in the summer to $50 today, the decision of the Israeli government provides an impetus to the company's leadership, not to mention the new CEO David Stover, to reconsider the commitment to Israel and begin to seek greener pastures.

There are very few oil and gas companies who have both the experience of drilling in deep waters and the willingness to associate themselves with Israel, especially in light of Noble's experience.

The Israeli government's ruling has huge implications for the future of the region as it means that at best the supply of gas from Leviathan will be delayed into the 2020s. At worst it will not happen at all. The government's concern about a gas monopoly is a legitimate one, especially during an election campaign when issues of cost of living dominate the local political discourse. But its hopes that the hot potato called Leviathan can somehow be sold to new partners require a lot of faith. There are many people with money who may be tempted to buy into a partnership in a 22 trillion cubic feet (tcf) field, but owning a stake in a gas field without an operator at hand is like owning a gold mine on the moon. There are very few oil and gas companies who have both the experience of drilling in deep waters and the willingness to associate themselves with Israel, especially in light of Noble's experience. With falling energy prices worldwide, the chance of a Noble-like operator popping out of nowhere is slim. This means that in its desire to avoid the creation of a monopoly, Israel is taking the risk that Leviathan, the world's largest offshore gas discovery of the past decade, will not be developed for many years to come - if ever. The losers will first and foremost be the Israeli people who will lose not only billions of dollars in tax revenue and the main engine of growth of their economy but also the prospects of securing their energy supply for generations. The scenario is equally bad for Jordan, Egypt and the Palestinian Authority who are counting on Leviathan gas for their economic well-being and which have all signed letters of intent to buy Israeli gas despite local opposition from their respective Israel-hating Islamists. Europe will also be a casualty since a portion of Leviathan was aimed for two LNG terminals in Egypt from where it would have been shipped to European countries aspiring to become less dependent on Russia's gas.

Other than the handful of lawyers who will earn millions litigating the dispute between Noble and the Israeli government in international courts, the biggest winner will be Cyprus. In December 2011 Noble announced the discovery of 7 tcf in a field northwest of Leviathan called Aphrodite (block 12). Other blocks have been opened for bids since attracting interest from a handful of large oil and gas companies including Total of France, Kogas of South Korea, ENI of Italy and Petronas of Malaysia. But with all eyes on Leviathan, Cyprus became an uninteresting side show. This may soon change. Cyprus may not be a paragon of regulatory stability and certainly not an investors' haven and its tense relations with Turkey pose some geopolitical risk, but the fatigue from Israel's energy shenanigans could bring about a shift from Israel to Cyprus as the new center of gravity in the East Mediterranean energy play.

There is no polite way of saying this. Israel's latest decision is tantamount to nationalization of the kind seen in Argentina, Venezuela, Mexico and Russia. All of those governments sugarcoated their decision invoking the need to protect the public interest. The investment community and global oil industry got the message and wrote off those countries. With this miserable decision, Israel has just lodged itself into this notorious club. The price will be paid in spades – and sooner than most Israelis realize. More

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As the map above shows the gas field in offshore Gaza who should be the benefliciaries. Under international law Israel has no legal claim and Gaza most certainly does. I would give Gaza an income to rebuild the infrastracture destroyed by Israel as well as giving them fossil fuel to generate electricity. Editor

 

© 2014

The injustices being inflicted by Israel on the Palestinians

Via Jonathan Cook, journalist

I did a brief speaking tour of Montreal and Ottawa in the spring during which I met many inspiring individuals finding their own ways to help from afar end the injustices being inflicted by Israel on the Palestinians.

One seminar I participated in was on the Jewish National Fund, a Zionist "charity" whose funds have been used to plant forests to conceal Israel's eradication of Palestinian villages during and after the 1948 war and which continues to ethnically cleanse Palestinians from areas like the Negev, or Naqab.

It's great to see that the organisers have put together a powerful short video presentation that shows pictorially what the JNF is really doing with those charitable donations.

http://youtu.be/rnm-HKf6MJU

© 2014

House evictions forge new alliances

Yafit Cohen is a wife and mother of four - her youngest child is just a few months old. Cohen makes her way up the stairs, slowly, easing her baby carriage around a gaping hole. "Watch out," she says to me.

I look down. I can easily imagine her 8-year-old son, a talkative little boy who has raced ahead, falling through. I gasp at the thought.

"I know. It’s dangerous," Cohen says, adding: "And it’s not legal."

Cohen, a Jewish Israeli, lives in low-income, subsidised housing. Worried that her children, or those of her Palestinian neighbours, could be injured or killed, she has asked the state to fix the stairs. They have not.

What the state is working on, however, is making Cohen and her family homeless. The housing authority wants to put Cohen, her husband, their four children, her brother-in-law and niece - "eight souls," as she says - on the street.

Between the two companies that manage public housing - Amidar and Halamish - over 800 Palestinian and Jewish families throughout Yafo and Kfar Shalem, an impoverished neighbourhood in South Tel Aviv, face eviction.

"We have nowhere to go," Cohen says, explaining that her parents and her siblings are also in dire financial straits.

When I ask Cohen why the state wants her apartment, which is decorated with Israeli flags, she answers: "I have no idea."

But the second I step inside, I know. The doors might be sagging, but the wood is original, antique. The roof might leak in the winter, but the ceilings are high, elegant. And the walls might have mold, but its windows are capped with pointed arches - trademarks of Arabic architecture.

Gentrification

Once it is repaired, Cohen's home will make a beautiful, expensive loft apartment. I can already imagine the Orientalist advertisement, over-written and flowery: "In the heart of historic Yafo, a place that evokes the smell of blossoming orange groves and the echoes of shouting spice vendors ...."

Gentrification is happening all over the world. But, like everything in Israel, here it comes with historical baggage and deep political implications.

In 1948, Israel forced some 700,000 Palestinians from their homes. Villages and houses were destroyed. And some of those that remained standing were Hebraicised. The city of Jaffa, for example, was given the Hebrew name Yafo. Salame became Kfar Shalem.

But the young state did more than rename places. It also repopulated them. Both Israel and the Jewish Agency turned over "abandoned" Palestinian properties to poor Jews. Oftentimes, the new residents were Mizrachim (Easterners) - Jews from Arab countries.

Today, some of these Mizrachi families still live in poverty. And now they face eviction as the government sells their homes to the highest bidder.

Unusual alliances

The state settled Cohen's grandparents, who immigrated to the then-nascent Israel from Turkey and Iraq, in Yafo. Like her parents, Cohen was born and raised in Yafo, as was her husband. While they do not get along with the Palestinian family downstairs - due to a neighbourly dispute that is personal and not political - Cohen's husband maintains close relationships with the Palestinians he grew up amongst.

"They're like brothers," Cohen says.

But, gentrification is not the only problem in Yafo. Jewish settlers are also moving into the area and holding right-wing rallies. And Cohen's children are growing up in a much tenser environment than the one she and her husband recall from their childhoods.

Cohen used to let her children play outside but, recently, she has been keeping them indoors.

"Whenever the settlers have a demonstration, [some of the Arab children] start to yell, 'Get out of here,' and 'Jewish trash,'" Cohen says.

At the same time that settlers threaten the delicate relationship between Jews and Palestinians in Yafo, the struggle for housing and dignity is building some new and unusual alliances.

Mizrachim have traditionally leaned to the right, voting for political parties like Prime Minister Binyamin Netanyahu's Likud and the ultra-Orthodox Shas. But a recent protest against home evictions - held in Yafo - found hundreds of Likudniks and Shas supporters standing alongside Palestinians.

While the picture was not entirely rosy - one Jewish Israeli protester refused to speak to Al Jazeera, and asked me, mockingly, if "the Arabs" pay well - the crowd was united around two issues: Poverty and home evictions.

And the anger of some residents was palpable.

Sima, 39, shouts: "[Halamish] wants to throw us from our house. They want to throw us without giving us anything. And we don't have any money."

"What are we? Dogs? Cats? What are we?" Her family members tell her to calm down. Sima's daughter asks that their last name be omitted. A teenage girl, she is less worried about housing, and more concerned that her friends at school might found out that she and her family faces homelessness.

"It's embarrassing," she says.

'Appearance of democracy'

 

Marsela Edri does not live in Yafo or Kfar Shalem. She came to the protest from Ashdod, about 45 minutes away, because, she says: "This could happen to me."

"[Home evictions] have taken place in Kfar Shalem, Jerusalem, everywhere in the country," Edri says.

While many of the protesters - both Jewish and Palestinian - attribute the issue to racism, Edri, who was born in Morocco, points out that the increased concentration of wealth is also a problem. And the role the government plays in this is troublesome.

"There is just the appearance of democracy [in Israel]," Edri says. "This place is a democracy for the people who have cash in their pockets." More