Israel proposes undersea gas pipeline to Europe

The idea of an undersea gas pipeline to Greece emerged in response to the recent political tensions with Turkey.

Sources inform ''Globes'' that Israel is considering building an undersea pipeline to export natural gas to Europe. The idea has been raised at the highest levels, including during a meeting last week between Prime Minister Benjamin Netanyahu and Greek Prime Minister George Papandreou.

The idea of Israel becoming a natural gas exporter will become realistic if the projections for the Leviathan prospect by Noble Energy Inc. (NYSE: NBL) materialize. In June, the company announced that the 3D seismic survey on the Leviathan structure found a fairly high 50% probability of geological success of a 16 trillion cubic foot (453 billion cubic meters) natural gas reservoir.

Noble Energy owns 39.66% of the Leviathan prospect, Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 22.67%, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%

This is enough to meet Israel's needs for 60 years at current demand projections. The Leviathan reserve comes on top of the Tamar find, which can meet Israel's needs for 30 years. Noble Energy and Delek also own Tamar together with Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd.

Israel hopes that the possibility of exporting natural gas to Europe will strengthen the country's geopolitical standing. There is considerable anxiety in European countries over their dependence on Russian gas as a key energy source, after the Russian government's muscle-flexing and willingness to cut off gas supplies to countries that do not accept its diktats.

The idea of building an undersea pipeline from Israel's gas reserves to Greece emerged in response to the recent political tensions with Turkey, which would ordinarily be the natural partner for such a project. A pipeline to Greece, which is farther away, would be more expensive. However, Greece has a number of advantages, beginning with the fact that it is a member of the EU.

Published by Globes [online], Israel business news - www.globes-online.com - on August 30, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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