International Business

An analysis by Israeli officials called “Commercial Opportunities for Turkish Companies” has recently revealed that the cost of building a pipeline between Turkey and Israel would vary between $2.6 billion and $3.9 billion and, that if Greece is chosen as a route for the pipeline, the average cost of the pipeline would amount to $7.15 billion to carry the gas to Europe.

According to the study presented by the Israeli Embassy in a meeting attended by officials from energy companies, a possible pipeline between Turkey and Israel might reach 600 kilometers in length. It is predicted that the pipeline construction to carry Mediterranean natural gas to the European market will range from $4.4 million to $6.6 million per kilometer.

In this context, if the natural gas is to be carried to Europe via Turkey, the cost of an assumed 600-kilometer-long pipeline will vary between $2.64 billion and $3.96 billion. Thus, the average cost of the pipeline stretching from Israel to Turkey will reach $3.3 billion. If the Greece route is preferred, the cost will double. For the actualization of the project, a 1,300-kilometer pipeline must be built to Greece. In this case, the average cost exceeds $7.15 billion.

The East Mediterranean region has several natural gas fields which are not commercialized yet via pipelines or LNG facilities, such as the Leviathan field with 621 billion cubic meters (bcm) in capacity, the Tamar field with 283 bcm in offshore Israel and the relatively small Aphrodite field with a 127 bcm capacity in the offshore Greek Cypriot administration.

Turkey and Israel have been conducting high level talks to normalize bilateral relations while experts concur that the realization of a natural gas pipeline from Israel to Turkey is a key motivator.

Turkey and Israel have agreed to establish a mutual energy dialogue, further strengthening ties between the countries following a six-year pause in relations, Israeli Energy and Water Resources Minister Yuval Steinitz said in October.  After attending the 23rd World Energy Congress in Istanbul, which marked the first ministerial-level visit since the raiding of a Turkish flotilla in international waters in 2010, Steinitz said that Turkey and Israel plan to enhance cooperation in the energy field.

“Turkey and Israel will examine the feasibility of building a gas pipeline,” he said.

Last month, Israel invited bids for 24 new offshore oil-and-gas exploration licenses it hopes will bring more major finds in the Mediterranean as it strives to become an energy exporter.

“We are offering out exploration in half of our economic waters in 24 blocks,” Energy Minister Yuval Steinitz said, announcing the offer that closes on April 21. “Estimates are that most of the natural gas in Israel’s economic waters are yet to be found,” he said in a news conference, adding that the U.S.’s energy department shared that view.

The government hopes the new blocks turn up discoveries comparable to the Tamar and Leviathan natural gas fields found off its coast in recent years. Israel hopes the Leviathan field and others to come will eventually allow it to become a gas exporter, which could provide it with additional leverage in the turbulent Middle East.

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