Suicide Is Painless -- December 24, 2014

Updates

March 27, 2016: Israeli Supreme Court rules against this opportunity for Israel to become energy independent. 
 

Original Post

 

Remember that story about Israel becoming energy independent due to huge natural gas fields found off-shore by Noble? Not gonna happen. Rigzone is reporting:

The Israeli government’s ruling has huge implications for the future of the region as it means that at best the supply of gas from Leviathan will be delayed into the 2020s.

At worst it will not happen at all.

The government’s concern about a gas monopoly is a legitimate one, especially during an election campaign when issues of cost of living dominate the local political discourse.

But its hopes that the hot potato called Leviathan can somehow be sold to new partners require a lot of faith. There are many people with money who may be tempted to buy into a partnership in a 22 trillion cubic feet (tcf) field, but owning a stake in a gas field without an operator at hand is like owning a gold mine on the moon.

There are very few oil and gas companies who have both the experience of drilling in deep waters and the willingness to associate themselves with Israel, especially in light of Noble’s experience. With falling energy prices worldwide, the chance of a Noble-like operator popping out of nowhere is slim.

This means that in its desire to avoid the creation of a monopoly, Israel is taking the risk that Leviathan, the world’s largest offshore gas discovery of the past decade, will not be developed for many years to come - if ever.

The losers will first and foremost be the Israeli people who will lose not only billions of dollars in tax revenue and the main engine of growth of their economy but also the prospects of securing their energy supply for generations. The scenario is equally bad for Jordan, Egypt and the Palestinian Authority who are counting on Leviathan gas for their economic well-being and which have all signed letters of intent to buy Israeli gas despite local opposition from their respective Israel-hating Islamists.

Europe will also be a casualty since a portion of Leviathan was aimed for two LNG terminals in Egypt from where it would have been shipped to European countries aspiring to become less dependent on Russia’s gas. 

The story at Rigzone by Reuters, the day before:

Israel's antitrust authority said Monday it may revoke an arrangement permitting an Israeli and a U.S. company to develop Israel's largest natural gas field by branding them a cartel.

The authority summoned representatives of Israel's Delek Group and Texas-based Noble Energy and told them it was "still considering to announce that buying Leviathan was illegal.

"We didn't make any decision today," an authority spokesman said after the meeting had ended. Anti-trust authorities have been targeting the companies, which discovered the field and two others, after criticism that the firms have too much control of such valuable national assets. 

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