Levant News | Israeli-Cyprus Gas for Local Use Only?

Levant News | Israeli-Cyprus Gas for Local Use Only?

Gas from Tamar is set to start flowing to Israel this year. But further development of Leviathan depends on politics. Nationalists want all the gas to be reserved for Israeli consumers but unless exports are allowed foreign companies are concerned the Israeli election this month will bring in the nationalists and with them an anti gas export policy. If that is the case then profits may take a downturn.

Middle East politics indicate that some of the normal methods of exporting the gas via neighbours are currently closed to Israel. One of the possibilities open to them is a pipeline to Greece, connecting with Europe’s distribution system, but this would be costlier and riskier. Anyway, demand in Europe is falling and the pricing system is breaking down, pulling prices lower.

The gas could be liquefied but this would require huge investments and a big coastal site. Cyprus is keen but doesn’t have the cash. Israeli gas could be liquefied in Cyprus, but that would mean Israel ceding control something a new nationalist would be against and a plant in Israel would be impractical.

In short, the gas is there but, apart from its use by Israel and Cyprus, currently there is little hope of it going elsewhere. Not an attractive proposition for a foreign investor.


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