Turkish
conglomerate Zorlu Group is planning to lay an undersea pipeline from Israel
offshore drills to Turkey's south coast.
By Itai Trilnick and Avi Bar-Eli | Feb.14, 2013 | 4:00 AM
The
Turkish conglomerate Zorlu Group has been working in recent months to convince
the Israeli government and the Leviathan gas field partners to approve energy
exports to Turkey, TheMarker has learned.
Zorlu's
plan is to lay an undersea pipeline from the Leviathan field 130 kilometers off
Haifa to Turkey's south coast. The pipeline would deliver between 8 billion and
10 billion cubic meters of gas annually.
The
Turkish firm's proposal could be attractive as a cheap way of delivering large
amounts of gas to a major customer. But the strained ties between Jerusalem and
Ankara pose considerable obstacles, not to mention risks.
Zorlu,
a family-owned company, has interests in textiles, communications, energy and
real estate (see picture), and is considered one of Turkey's biggest consumers
of natural gas. In Israel, it owns a 25% stake in Dorad Energy, which is
developing a power plant in Ashkelon. It also has a 42% interest in
cogeneration projects being developed by Edeltech Group at the Makhteshim Agan
plant in Ramat Hovav and other sites.
The
Leviathan field, Israel's biggest, contains an estimated 425 billion cubic
meters of natural gas. Leviathan's partners - Delek Group and Noble Energy -
say the smaller Tamar field will produce enough gas to supply all of Israel's
needs for the coming years and want to export all the Leviathan gas.
A
pipeline to Turkey explored by the partners over the two years, alongside
proposals to build a pipeline to Greece or Egypt or export it as liquefied
natural gas.
The
Turkish option was rejected because of the deteriorating relations between the
two countries. But the other options have become less attractive as well, with
Greece's economic crisis worsening and the cost and engineering challenges of
LNG proving difficult.
If
Ankara were to agree to pay $9 per million British thermal units, selling to
Turkey would be more lucrative for the Leviathan partners than selling it at
$12 to $13 BTU as liquefied natural gas to China.
The
political problems of exporting to Turkey involve more than bilateral
relations. Industry sources say an undersea pipeline would have to pass through
the economic zones of Lebanon and Syria. Second, sales to Turkey would come at
the expense of Russia's dominant position as a gas exporter to Turkey and
Europe.
Entering
the European market would threaten the state-owned Russian energy company
Gazprom, which had sought a stake in Leviathan but lost out to Australia's
Woodside. Gazprom and Moscow would be likely to pressure Turkey not to import
Israeli gas.
A
Turkish deal would reduce the role of Woodside as a partner in Leviathan. The
company has agreed to pay $2.5 billion for a 30% stake, but its value is its
expertise in LNG and ties to the China market, neither of which would be
relevant.
The
Foreign Ministry recently held discussions on gas exports to Turkey from
Leviathan, but a spokesman for the Prime Minister's Office yesterday denied
reports that an aide to the prime minister, Harel Locker, had been in Turkey to
explore a deal.
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