It’s a Gas! Gas! Gas!

As the world focused on events on Mediterranean waters this week, there were other developments, just as important, going on 1.5 km under the water, not far from where nine people lost their lives. And although the Gaza flotilla disaster has the potential to drastically alter the political landscape of the Middle East, the rumblings occurring just 90 km off the shores of Haifa have already begun to change things without most people knowing it.  

On Thursday, Noble Energy, one of the biggest energy groups in the world, announced plans to drill at the record-sized Leviathan site, opposite Haifa. The huge site is situated close to two other sites, Tamar and Dalit, where Noble has already found natural gas and plans to start drilling by 2012.  

Tamar is huge. It was discovered in January 2009 and holds over 6 trillion cubic meters of gas. It was expected to produce 25 thousand barrels of gas a day. That’s about five times more than the average Saudi well. Reports have said that Tamar will pretty much make Israel self sufficient for at least three decades. Yitzhak Tshuva, Israeli tycoon and owner of Delek Energy who is a partner with Noble in the sites, has been hinting that Leviathan might be even bigger.  

Leviathan (in red)

But on Thursday it got even better for Noble and Tshuva. First they announced that Tamar holds 33% more gas than expected. And then they said that Leviathan has a 50% chance of holding twice as much as Tamar – over 16 trillion cubic feet of natural gas. In the drilling world, 50% is actually considered very good odds; the chances for Tamar were much lower and look what happened there. Noble said on Thursday that there are 30 trillion cubic feet overall in the area off the coasts of Israel, more than twice U.K.’s proven gas reserves.  

What does this mean for Israel? Well, after all these years of complaining about how all our neighbors are filthy rich from oil, it looks like Israel might get a piece of the pie. Not only that – Israel will not only have enough gas for itself, it will most probably be able to do what was once the unthinkable: export gas.  

Tshuva

For Israelis themselves, this is good news. According to Yedioth Ahronoth financial analyst, Sever Plotzker, the Israeli government will get 40-45 shekels for every 100 shekels of gas sold. If Tamar alone will supply 150 billion shekels over 15 years, the state coffers will be filled with 60 billion shekels.  

But even more importantly, this find has geopolitical ramifications that are yet to be evaluated. Tshuva, who also owns the New York Plaza Hotel and is invested in other real estate projects in the U.S., said on Thursday the “the gas finds will turn Israel into a large player in international markets and will strengthen Israel’s economy”.  

One doesn’t have to look far – Saudi Arabia is close enough – to see how resources are turned into power and how that power can sometimes make the West turn a blind eye to things it doesn’t approve of.  

Good news for Israel. It’s neighbors might be a bit more than disappointed.

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