Israeli Gas Holds Promise of Better Ties with Neighbors

Turkish Rapprochement

Once close allies, ties between Israel and Turkey were severely damaged following a deadly raid by Israeli commandos on a Turkish yacht carrying pro-Palestinian activists trying to defy an Israeli blockade on the Gaza Strip in 2010.

Poor relations remain a barrier to a deal on gas, though the sides are talking.

"High-level negotiations on resolving political issues, and lower-level negotiations aimed at making progress on energy have always been held," said a senior Turkish energy official. "Normalisation on the relations will pave the way for investment and cooperation on energy."

U.S-led reconciliation efforts in recent months could be boosted by the promise of gas.

"There is clearly significant potential for turning East Mediterranean's new gas wealth from a potential source of conflict to a catalyst for regional cooperation," said Oxford Research Group analyst Sara Hassan. "Turkey will want at least to be seen as trying to leverage better conditions for Palestinians alongside any potential deal."

Peace talks to resolve the generations-old conflict between Israel and the Palestinians are close to collapse, with the Israeli government beginning to impose new economic sanctions on president Mahmoud Abbas's West Bank Palestinian Authority amid mutual recriminations about the deadlock.

Talks between the Leviathan consortium and Turkish counterparts are focusing on building a 10 billion cubic metre (bcm) sub-sea pipeline at an expected cost of $2.2 billion, giving Israel access to a major emerging market and one of Europe's biggest power markets by 2023.

"We think construction phase for a pipeline to transport Israeli gas to Turkey could begin in the second half of 2015," a Turkish energy official said.

A separate yet-to-be-built pipeline linking Europe with the Caspian through Turkey in 2019 could eventually also open up a new market for Israeli gas in western Europe.


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