snapshots

Israel: Leviathan Natural Gas Development Clears Crucial Step

2 MINS READFeb 23, 2017 | 19:36 GMT

Development of the Leviathan natural gas field off the coast of Israel has cleared a crucial final hurdle with an investment decision by the U.S.-Israeli consortium that has production rights to the field. Delek Group and Noble Energy will spend $3.75 billion over the next three years to develop the first phase of the project, and initial production is expected by 2019. The controversial development project has suffered delays since the field was discovered in 2010.

Concern that the deal would give the consortium a monopoly over Israeli natural gas supplies led a member of Benjamin Netanyahu's Cabinet to resign after the prime minister tried to force the agreement through on national security grounds. Even after Netanyahu himself testified on the agreement's merits, the courts struck it down, but a deal was eventually worked out.

The first phase of the project is expected to produce as many as 12.4 billion cubic meters (bcm) of natural gas a year, enough to both partially supply the Israeli market and also to add to regional markets. Deals have been secured to send part of the natural gas to both Egypt and Jordan. The Jordanian export deal has proved controversial: After it was finalized in September 2016, protests erupted in Amman in a rare public show of discontent in the country.

After the second phase of the project is completed, production is expected to almost double to 21.4 bcm a year. Tel Aviv hopes to export that additional production to Turkey, helping strengthen its ties to the country. Shipments to Turkey would likely not commence before the early 2020s. But the plans highlight Tel Aviv's desire to use its natural gas resources strategically.

Leviathan is just one project among several underway in the Eastern Mediterranean. In Egypt, the supergiant Zohr natural gas field is in development and could come online this year. Moreover, Lebanon is in the midst of its first offshore licensing round, which it hopes to conclude later this year.

Article Search

Copyright © Stratfor Enterprises, LLC. All rights reserved.

Stratfor Worldview

OUR COMMITMENT

To empower members to confidently understand and navigate a continuously changing and complex global environment.

GET THE MOBILE APPGoogle Play