Natural Gas in Israel - Assignment Example

Natural Gas in Israel Israel has been seeking to find natural gas and oil for a long time. The recent discovery of natural gas within its territory has indeed given it a new lease of energy. The positive country has started witnessing growth in terms of the strengthening of the shekel, new start-ups, renewed foreign relations, and greater prospects for the growth of other industries and sectors. While this is the case, the country has also to brace itself for real conflict and war with neighbouring countries such as Palestine and Lebanon. Other potential aggressors include terrorist groups like Hezbollah. This means that even as it focuses on economic development, Israel must give good attention to its defence and the activities of its neighbours and maintain a robust and well thought out foreign policy. One other challenge that the country has to deal with is pollution. With the development of new industries comes more pollution. The country has taken a raft of measures to ensure that its remains stable and harvest the resource sustainably. It remains to be seen, however, how the country will deal with these challenges. Natural Gas in Israel For a long time, the world has known the economic importance of oil and natural gas. Many countries including The United Arab Emirates and Canada are testimony to the wealth and power that comes with having natural gas and oil as part of a country’s natural resources. Being situated in the Middle East which is associated with massive oil and natural gas reserves, Israel hoped that it too would enjoy the benefits of having oil and natural gas wells ever since its establishment as a modern country. While this was the case, the country’s prospects of discovering natural gas and oil very little promise. Between 1954 and 1969, the officially country began to hunt for natural gas reserves off and onshore as noted by Forman (2013). After more a long period of searching, the Tethys Sea Partnership announced that it had discovered natural gas in the Noa field. The discovery of the Mari B field after the first discovery was a feat that sparked great interest in Israel’s coast. The year 2005 saw Israel sign a contract with Egypt for the supply of 40 percent of its yearly demand (Forman 2013). The Tamar, Dalit 1, and Levithian reserves were discovered between 2009 and 2012 marking a major breakthrough for the small country (Forman 2013). For the first time in the history of Israel, natural gas from the Tamar reserve flowed in 2013 marking another major breakthrough in the country’s history. Although the country produces small amounts of natural gas, its natural gas industry is well developed. Natural gas was first developed in Israel in 1986 and its production of the natural resource has remained relatively steady over the years (Bronson2014). In 2009, the country produced roughly 54.7 cubic feet of dry natural gas. This amount accounts for about 50% of its yearly consumption (Bronson2014). In 2009, the country discovered a relatively big natural gas reserve near Haifa - a place also claimed by Lebanon. One of Israel’s main gas fields is Tamar gas field. The field is located in the Mediterranean Sea, several kilometers from Israel’s coast. The gas field is located in waters that are about 1700 meters deep, some 80 kilometers from Haifa. The Tamar oil field was Israel’s first large scale hydrocarbon resource. The discovery of gas in the Tamar gas sands was confirmed in 2009, it being estimated to have about 223 billion cubic metres of proven natural gas (Shoshanna & Ackerman 2013). In addition, the field is estimated to have a probable 84 billion cubic metres of natural gas. Production of gas in Tamar gas field is effected through five wells that are connected by under sea pipes. From the wells, the natural gas is transported to Ashkelon where there gas is purified and liquefied (Shoshanna & Ackerman 2013). When the production of gas from the Tamar field was initiated, total delivery capacity of natural gas stood at about 10 billion cubic metres per year (Shoshanna & Ackerman 2013). Over the years, the need to upgrade the supply infrastructure from the offshore processing plant to the Ashdod reception station has been seen. The upgrade is on course and is expected to be completed some time in 2016. It is expected that after the completion of the upgrade, the reception plant will be able to receive about 1,500 MMCF/day. Although Delek Energy which is the company that owns and manages the production of natural gas from Tamar was expressed a will to export liquefied natural gas to South Korea and Cyprus, this plan was temporarily halted by the Israeli government. In addition to the Tamar gas field, Israel has a number of gas fields that could supply the country with natural gas for at least 150 years (Shoshanna & Ackerman 2013). Other natural gas fields in this respect include Dalit and Leviathan, the latter being the largest in the country. The Tamar gas field alone is estimated to have a capacity to supply the country with billion dollars worth of the natural resource in a period of 20 years as noted by Shoshanna and Ackerman (2013). According to a senior analyst affiliated to Excellence Nessuah Brokerage Limited, the natural gas in Tamar will not only earn the country a lot of tax revenues but also save it from having to import expensive fuel from hostile neighbours. The Leviathan field is estimated to contain a natural gas reserve of about 18 trillion cubic feet (Shoshanna & Ackerman 2013). Together, the three oil fields are estimated to be 14 times larger than the total natural gas reserve Germany is proven to have (Shoshanna & Ackerman 2013). Although Israel is not energy independent currently, the discovery and utilization of gas fields within its domain will go a long way toward achieving energy independence. Furthermore, it is expected that this resource will enable Israel become an important player in the international scene. Impacts of Natural Gas on Israel’s Economy With the production of natural gas in Israel, real changes in the country are anticipated. The country’s currency has started to gain ground against major international currencies including the dollar as a direct consequence of the discovery of natural gas in the country as noted by Forman (2013). The country has also seen several startup businesses related to natural gas and energy get established. A lot of research activity is part of the deal today in the small but powerful country. Only recently, the Primus Green Energy with the support of the IC Green Energy developed a technology for converting natural gas into fuel that can be used in the transport industry (Forman 2013). The country also plans to construct at least six natural gas stations in different parts of the country. In terms of economic growth, the country hopes to retain at least 60% of the earnings that it gets from natural gas every year. This is bound to have a major impact on the local economy and the lives of the Israelis. Impacts of Natural Gas on Israel’s Foreign Policy and International Relations The discovery of more natural gas in Israel has started to shape the country’s foreign policy, and geopolitical relations apart from impacting positively on its economy. In June 2013, the country announced that it intended to export about 40 percent of its natural gas production annually (Forman 2013). The country also severed its gas treaty with Egypt in 2012 after confirming that it had the production capacity to meet local demand. The country is also reported to have entered into an agreement with Greece toward the construction of a 10 billion dollar plant that would liquefy the natural gas for joint export (Forman 2013). The country is also considering Turkey’s request to construct an undersea pipeline that will take the natural gas to a processing facility in Turkey. Because of its new found status as a natural gas producer, Israel intends to leverage a peace deal between its estranged neighbors Turkey and Greece. Yet another possibility for Israel is to tighten its relationship with Egypt by exporting the gas for processing to its long time ally (Forman 2013). In as much as Israel is hoping that its discovery of natural gas will go a long way in bringing it to a new level of empowerment, analysts are keen to note that the country has to brace itself for conflict with some of its neighbors including Lebanon. Lebanon lays claim to the Tamar and Levithian fields (Forman 2013). Palestine, a perennial opponent to Israel is also ken on seeing the developments that surround the natural gas discovery in Israel. Palestine also lays claim to part of the area in which Israel has gas reserves. Such extremist groups as the Hezbollah and Al Qaeda may also find reason to attack Israel if only to impede its political and economic success and growth. In a bid to contain potential threats and deal with real ones, the country will have to invest a significantly higher portion of its revenues on defense. To this extent, the country will have to develop or purchase from friendly nations high tech military equipment to protect its territory and its new found resources. Impact of Natural Gas on the Natural Environment of Israel Natural gas is bound to spur the establishment of many industries in Israel. Many industries in Israel will also take to using natural gas for the production of energy such as electricity. The increased use of natural gas for the production of energy and power is bound to lead to an increase in the level of pollution in the country (Economist 2010). This is in addition to the fact that natural gas exploration and production activities cause a lot of air and water pollution. In anticipation of these challenges, the Israeli government has taken measures to see experts engage in research to develop new technologies that are more efficient, reliable and environmentally friendly (Economist 2010). Other effects of the production of natural gas in Israel will include noise pollution especially if trucks are used in the transportation of the product to different places. The Israeli government has taken cognizance of the fact that the discovery of natural gas and petroleum in a country is often associated with the decline of other industries and sectors of the economy. To this end, the country has taken steps to establish a committee that will see other sectors of the economy grow over time even as the revenues from natural gas start to trickle in. Conclusion Although Israel is situated in the Middle East where oil and natural gas abound in plenty, it has almost little oil reserves and small deposits of natural gas. The country’s discovery of natural gas is a bigger blessing than it is a curse. The country is bound to earn more in foreign exchange from the product. The revenue from natural gas will spur economic growth as it will significantly raise the country’s GDP and per capita income. Furthermore, the country’s development in terms of new start-ups and new technologies is bound to be greatly visible. The country has so far made several changes to its foreign policy and relations with different countries. For example, while it maintains a favourable relationship with Egypt, it severed its gas agreement with the country. The country has also tightened its relations with several countries on account of natural gas as it seeks potential markets and assistance in developing the natural gas sub-industry. The country also has to deal with potential threats and aggressors such as Palestine, Lebanon, Hezbollah, and Al Qaeda. The country is bound to face a number of challenges on account of its production of natural gas. For one, the country risks neglecting other of its natural resources and industries at the expense of the natural gas industry. The country will most probably witness higher levels of air, water, noise, and soil pollution as more industries are established and during the transportation of the product. My research on the exploitation of natural gas in Israel has wakened me up to the fact that natural resources can be a major source of wealth for a country. While this is the case, the natural resource can be a source of conflict as in the case of Israel, Lebanon and Palestine. Furthermore, I have come to learn that during the exploitation, production or use of a natural resource, negative effects on the environment are almost unavoidable. Companies, governments and different stakeholders should thus take responsibility and take measures to avoid or reduce environmental pollution. To ensure sustainability, a business organization should take into consideration the potential impacts of its activities and take appropriate measures in dealing with effects. References Bronson, S. 2014, ‘List of Israel's Natural Resources’, viewed 5 April, 2014 http://traveltips.usatoday.com/list-israels-natural-resources-63037.html Economist 2010, ‘Israel and its natural resources: What a gas!’, viewed 5 April, 2014 http://www.economist.com/node/17468208 Forman D. 2013, ‘The miracle of gas: Investing in Israel’s natural gas industry’, , viewed 5 April, 2014 http://blog.ourcrowd.com/index.php/2013/11/18/the-miracle-of-gas-investing-in-israels-natural-gas-industry/ Shoshanna S. & Ackerman, G. 2013, ‘Israel Begins Gas Production at Tamar Field in Boost to Economy’. Bloomberg, , viewed 5 April, 2014 http://www.bloomberg.com/news/2013-03-30/israel-begins-gas-production-at-tamar-field-in-boost-to-economy.html Read More