Gas execs see Israel-Turkey gas deal by 2017 - GLOBES

28/06/2016, 06:54
Hedy Cohen

Experts believe Jerusalem will export 8-10 BCM to Turkey annually by 2020; official negotiations will begin soon.

The rapprochement agreement between Israel and Turkey presented Monday – and expected to be signed Tuesday – will also likely lead to the signing of a gas export deal by the end of next year, according to executives in the Leviathan partnership. The partners revealed they have opened talks with a consortium of 15 Turkish energy companies which expressed interest in half of the available reservoir.

The gas could also flow on from Turkey to Europe – which no longer wishes to rely on Russian gas. Both Israeli and Turkish sources believe Europe will import 8-10 BCM annually starting in 2020.

Zorlu Enerji, Turcas Petrol shares jump following Turkey, Israel signing deal - DAILY SABAH

Zorlu Group’s third energy facility in Israel is the 120-megawatt
Ramat Negev natural gas power plant (start.ops on Dec 31, 2015)

June 27, 2016

Following an agreement signed over the weekend between Turkey and Israel regarding the normalization of bilateral relations, the shares of Zorlu Enerji, carrying out business operations in Israel, and Turcas Petrol, interested in purchasing natural gas from Israel, saw considerable rises on Borsa Istanbul, increasing by 11.9 percent to TL 1.91 ($0.65) per share and by 2.11 percent to TL 1.45 per share, respectively.

Turkish and Israeli delegations met in Rome over the weekend to finalize the reconciliation deal between the two countries, and after six years of diplomatic struggle, Ankara succeeded in receiving an apology from Israeli Prime Minister Benjamin Netanyahu, compensation for the Mavi Marmara raid victims and the lifting of the Gaza blockade. As Turkey-Israel relations were officially normalized with this agreement, investors set their eyes on Zorlu Enerji and Turcas Petrol, both of which have business ties in Israel.

Israeli gas can be exported to Europe through Turkey after four years - TREND NEWS

15 May 2016, Baku, Azerbaijan
By Rufiz Hafizoglu - Trend:

It will be possible to export the Israeli gas to Europe through Turkey at least after four years, Israel's Consul-General in Istanbul Shai Cohen told the Hurriyet newspaper.

Currently, Israel has a real potential to supply its natural gas to European markets, he added.

The diplomat noted that first of all, the approval of Knesset (Israel's parliament) is needed for starting the supply of Israeli gas to European markets through Turkey.

Earlier, the CEO of Turkish Turcas Petrol A.S. Batu Aksoy said that 15 energy companies have expressed interest in joining the consortium which is planned to be created for transporting the Israeli gas to Europe through Turkey.

Israel close to signing gas agreement with Turkey - GLOBES

09/05/2016, 09:33
Hedy Cohen

An energy deal between the two countries is close says Energy Minister Yuval Steinitz and reports in the Turkish media.

Israel is closer than ever to signing an agreement to export natural gas to Turkey, according to reports in the Turkish and global press and statements by Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz in an interview at the end of last week with the "Bloomberg" news agency. Turkey wants to consume half of the quantity of gas in the Leviathan gas reservoir, starting in 2020. In the second stage, gas may be transported from Turkey to Europe through a pipeline.

"We have a strong connection with Israel, and importing Israeli gas to Turkey is a big deal for us," Zorlu Holdings CEO Omer Yungul said last week, adding that his company wanted to import 8 BCM of gas in the near future.

Ambassador (Former) Bryza Speaks About the Strategic and Economic Interests of Israel and Turkey | Natural Gas Europe

December 30th, 2015
The warming relations between Israel and Turkey has yet to materialise into a comprehensive diplomatic normalisation agreement. That end may take some time more. Meanwhile businessmen, advisers, academics and others, are trying to figure out how natural gas diplomacy would evolve in the East Med and what effects it will have on regional geopolitics and natural gas supply to Turkey, the biggest customer in the region.

To shed some extra light on the changing situation, Natural Gas Europe talked to Matthew Bryza, a former American diplomat and a former American ambassador to Azerbaijan who is currently a board member at Turcas Petrol, one of Turkey's biggest energy companies. He also serves as a senior fellow at the Atlantic Council in Washington, DC.

Mr. Bryza has extensive Eastern European and Eurasian experience from more than 25 years' activity in these areas as an American diplomat. He served as an American diplomat in Poland and in Russia, later joined the United States National Security Council as director for Europe and Eurasia, and then became Deputy Assistant Secretary of State for Europe and Eurasian affairs. In that role, he was involved with American efforts to advance peaceful solutions to various violent clashes that resulted from the disintegration of the USSR in Eurasia. With such extensive experience, combined with his current job as a board member in Turcas, one of Turkey's prominent energy companies, Ambassador Bryza is well qualified in the political as well as commercial sides of the natural gas industry in the Eastern Mediterranean.

Natural Gas Europe presented Mr. Bryza with questions concerning political developments in the region as well as questions concerning the possibility of Israeli-Turkish gas deals.

NGE: What are the chances for reconciliation between Israel and Turkey following the latest attempts to thaw the relationship between the two countries?

Mr. Bryza: The chances of reconciliation between Israel and Turkey are good, because it is in the strategic and economic interests of both countries to restore basic diplomatic relations. Russia’s recent belligerence toward Turkey and other NATO allies were the immediate catalyst of Israel and Turkey turning back toward each other. Thus, the test for Turkey and Israel will come when Turkey-Russia relations become less tense. Despite his harsh rhetoric, President Putin [off Russia] appears to be stepping back after a Turkish F-16 shot down a Russian Su-24 inside Turkish airspace last month, as reflected in his new-found conciliatory attitude toward the international community with respect to Syria. So, the key question is whether Turkey will continue to seek reconciliation with Israel even when Russia calms down, and I believe the answer is yes.

NGE: How critical is gas supply from Israel to Turkey in light of its deteriorating relationships with Russia?

Mr. Bryza: Gas supply from Israel to Turkey is not critical in the short run, since there is no chance Russia will cut off gas flows to Turkey. Indeed, Turkey is Gazprom’s second largest market after Germany, and one for which there is growing competition, which concerns Gazprom. Over the next 4 to 6 years, on the other hand, Eastern Mediterranean gas can play an increasingly important role in Turkey’s effort to diversify its supplies of natural gas away from a very expensive Russian supplier.

NGE: What are the natural gas quantities Turkish companies will be willing to purchase from Israeli companies?   

Mr. Bryza: In the near-term, I believe Turkish companies will be willing to buy 8 to 10 bcm [billion cubic metres] of Eastern Mediterranean natural gas for consumption within Turkey.

NGE: How much of that gas will be re-exported to Europe?

Mr. Bryza: All of that 8 to 10 bcm would be consumed within Turkey, whose natural gas market will expand in coming years. Once Turkish demand is satisfied, additional volumes of Israeli, as well as Cypriot and perhaps Egyptian gas, could be exported to the EU via Turkey.

NGE: Who will do the re-export: Turkish companies or Israeli companies?

Mr. Bryza: The commercial structure of possible sales of Israeli gas to EU member states remains to be determined, and will likely depend on the pattern of commercial cooperation that Turkish and Israeli firms develop in the near-term in gas exports to Turkey.

NGE: Who are the expected European customers (for example, Greece, Bulgaria etc.)?

Mr. Bryza: Given the likelihood that transportation costs will be netted out of the gas sales price that Israeli producers would receive, it would be most commercially attractive for Israeli gas to target the closest possible EU markets, which would indeed be Greece and Bulgaria. On the other hand, swaps of natural gas could theoretically enable Israeli suppliers to reach more distant markets.

NGE: Who will fund the 450-km pipeline construction from Leviathan to Turkey?

Mr. Bryza: The 450-km pipeline from Leviathan would be financed from natural gas sales, as part of a commercial deal, most likely on the basis of project financing.

NGE: What is the natural gas expected price at the well head?

Mr. Bryza: It is not possible at this time to determine what the price of natural gas would be at the wellhead. That price will be the subject of commercial negotiations of a gas sales/purchase agreement and defined by a mutually agreed pricing formula. That formula will likely be related to prices at a European natural gas trading hub, but adjusted to localised prices from other suppliers to Turkey, namely, Russia, Azerbaijan, and Iran.

NGE: What are the expected transmission charges?

Mr. Bryza: It is also too early to determine the costs of transmission, as these will be determined by the costs of construction and operation of the sub-sea pipeline. Such figures will require a more detailed feasibility study, followed by detailed engineering. But, these costs must be low enough to make sales to Turkey commercially attractive to both the companies developing Leviathan and to Israel. Otherwise, the pipeline will never be built.

NGE: What amount will be needed to be invested in the 450-km pipeline and for what annual capacity?

Mr. Bryza: Perhaps two billion dollars would be required for a pipeline with an annual capacity of 8 to 10 bcm.  But, this is only preliminary and rough estimate.

NGE: Because of the low oil price, Noble Energy is currently in a difficult situation regarding funding. Is there any option for a Turkish company to become involved as shareholders in the Leviathan gas field?

Mr. Bryza: It would be inappropriate for me to comment on possible interests of any Turkish–or American, for that matter–company in buying into Leviathan’s upstream development. What I can say, however, is that if all the factors describe above come together and exports of Leviathan’s gas becomes commercially attractive, many energy companies, as well as private equity funds, will be interested in investing.

NGE: Israel and Cyprus have yet to reach a unitisation agreement. Do you see any hurdles that will make it hard to achieve?

Mr. Bryza: I don't see any particularly difficult obstacle to Israel and Cyprus reaching a unitisation agreement for the entire geological structure in which both the Leviathan and Aphrodite fields lie, provided both countries continue to show the good will toward each other that has been present over the past year or so. Having the same private companies, Delek and Noble, as lead investors and developers of both of these fields should help smooth the way, unless, of course, anti-trust concerns in Israel return to Israel's political agenda.  

NGE: Is the partition of Cyprus an obstacle to Turkish-Israeli gas deals? Do you envisage it being resolved anytime soon?

Mr. Bryza: Comprehensive settlement of the Cyprus Question, or at least a major political breakthrough in the negotiating process, is required for an Israel-Turkey gas pipeline to attract necessary financing, since no major bank or private equity fund is likely to press ahead with such a big project against the expressed will of an EU member state like Cyprus. I do believe a major breakthrough in Cyprus negotiations is possible during the first half of 2016. Many of the most contentious issues that obstructed progress while I served as the U.S. mediator of Cyprus talks a decade ago appear to be resolved. That said, several difficult issues remain, any of which could derail the negotiating process. 

NGE: In regards to supply contracts, there is a trend toward de-linking the natural gas price from Brent. Will that be applied also to the Israeli-Turkish contracts? You mentioned a European natural gas trading hub. How much is it influenced by Brent price and is it less influenced from the Brent price than Russian gas?

Mr. Bryza: The structure of Israeli-Turkey gas sales/purchase contracts will be determined by commercial negotiations. I would anticipate that the commercial parties developing the project in both countries will search for a market-based pricing system, which means one that is de-linked from the price of Brent crude, and which is based on pricing at one of northwest Europe's highly liquid trading hubs, but perhaps adjusted to local prices in Turkey, which currently are a blend of relatively expensive gas from Russia and Iran and relatively cheaper gas from Azerbaijan. Northwest Europe's gas trading hubs are not influenced by the Brent price, and are determined by the market forces of supply and demand that play out in the form of competition from a range of suppliers. Russia's Gazprom is one such supplier. And so is Norway's Statoil, as well as a wide range of other gas producers in the North Sea as well as from further afield in the form of LNG.

NGE: At the current oil and natural gas prices level how long will it take to repay the investment needed in the pipeline?

Mr. Bryza: It is impossible to offer such an estimate at this early stage, but suffice it to say that the project will not attract investors if the payback period is too long.

NGE: How many Turkish energy companies are candidates to import Israeli gas? Which are they? Are they all private or will BOTAS be involved?

Mr. Bryza: I would prefer not to comment on the interests of other Turkish companies.  What I can say is that Turcas has been working with several Turkish as well as European companies to form a consortium of buyers. BOTAS would of course be involved at some point, but perhaps at a later stage, after negotiations among private companies have defined the project's basic commercial and financial parameters.

Ya'acov Zalel

SOURCE

Turcas CEO: Israel gas will flow to Turkey by 2020 | Globes

Batu Aksoy predicts that half of the gas in Israel's Leviathan field will be exported to Turkey.

23/12/2015, Hedy Cohen

"Half of the natural gas in Leviathan, 250 BCM, is slated for Turkey in the next 20-30 years. Starting in 2020, 8 BCM of gas will flow to Turkey each year," Turcas Petrol CEO Batu Aksoy stated yesterday at a press conference in Ankara. His remarks were widely reported in the Turkish press.

"In terms of the eastern Mediterranean gas, the Turkish-Israeli friendship is based on long-lasting history. As we enter the year 2016, we are in a period where we must further enhance our connections with not only our neighbors but also world countries." For months, the owners of the rights to the Leviathan gas reservoir have been negotiating the exporting of Israel gas with Turkish companies, including Turcas and Zorlu Petrogas Petrol Gaz. As of now, however, no concrete deal is yet being discussed. Since the Marmara incident, relations between the countries have deteriorated, and Turkish President Recep Tayyip Erdogan has banned imports of gas from Israel. Given the difficulty in exporting Israel gas to Egypt, however, and in view of the fact that Turkey has experienced repeated disruptions in its supply of gas from Russia, both sides have expressed a desire to renew the negotiations.

Only two weeks ago, "Globes" interviewed Turcas board member Matthew Bryza, who asserted that economically and strategically, exporting gas to Turkey is currently the best option for development of the Leviathan reservoir. "We need energy and we are willing to pay for it," Byrza said, adding that exporting gas to Turkey was also the best option for Israel. "The Israeli gas that Turkey could buy from Israel will be purchased at a lower rate than its other suppliers, but still higher than the price Israel would receive from Egypt,” he claimed.

Aksoy is now officially backing this line, saying, "Israel can help Turkey become a hub" and "Turcas is part of a consortium of companies that wants to import Israeli gas and market it to customers in both Turkey and Europe."

Aksoy spoke about Turkey's need to diversify its sources of supply, and stated, "Diversification of Turkey's natural gas sources, which will include Israel, among others, will help it lower the price of energy in the country… There have been substantial gas discoveries in the Middle East… We can achieve our goals only through resource variety."

The Turkish economy's consumption of gas is seven times that of the Israeli economy, and is projected to increase sharply and double in the next 20 years. Turkey has no gas resources itself, and is being forced to import gas from Iran, Russia, and Azerbaijan. Turkey pays a high price for the gas it buys: an estimated $15 per MMbtu to Iran, $12 per MMbtu to Russia, and $10 per MMbtu to Azerbaijan.

A pipeline is cheaper than LNG

The Turcas CEO also spoke about building a gas pipeline connecting Israel and Turkey, saying that exporting through a pipeline is always cheaper than exporting liquefied natural gas (LNG). He thereby hinted that exporting through the liquefaction facility in Egypt would be more expensive for Israel.

"A pipeline in the Middle East will be cheaper than exporting as LNG," Asksoy said, adding that the tension between Turkey and Russia only reinforces the need to build such a pipeline. If Israel exports gas to Turkey, it will be through an undersea pipeline from the Leviathan reservoir through Cypriot territorial waters to the southernmost place in Turkey, a distance of 485 kilometers from the reservoir.

Beyond the technical difficulties of building a pipeline in relatively deep water, another difficulty is that up until now, Cypriot prime ministers have rejected the idea, due to the tense relations between Cyprus and Turkey, which occupied the northern part of the island in 1974. Bryza commented on this in an interview, saying that the political disputes on the island were probably close to a solution, and that a referendum on the matter would be held in Cyprus next fall.

"Settling the conflict will help move the gas pipeline forward, and Cyprus will be very interested in such a pipeline," he said, adding, "Gas can be sent to Cyprus through the pipeline, and when the Aphrodite reservoir is developed, the direction of the pipe can be reversed, with gas flowing from Cyprus to Turkey," Aksoy asserted.

Published by Globes [online], Israel business news - www.globes-online.com - on December 236, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

SOURCE

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Same story in the Cypriot press follows:
Turkey could take Israel’s gas by 2020 | in-cyprus.com (Cyprus Weekly)
23/12/2015

The rapprochement between Israel and Turkey could see a rapid deal on gas, with the prospect of Turkey taking imports of gas from Israel by 2020, according to Turkey’s Today’s Zaman newspaper.

“We consider the Mersin port a feasible destination for Israeli gas,” the chief executive officer of Turcas Batu Aksoy told Today’s Zaman.

“The pipeline could then be connected either to the current infrastructure with some extra investment or to [the Trans-Anatolian Pipeline] TANAP, which is under construction. … The third option is to build one from scratch.”

Turkey and Israel are currently in talks on restoring official ties between the two countries after they broke down in 2010 following the Mavi Marmara incident. A final deal will not take long, a Turkish official told Reuters on Friday.

“I think that there is a serious, meaningful chance for thawing and normalising relations between Israel and Turkey. I also think that this is proof of the diplomatic value of the gas and the gas plan,” Israeli Energy Minister Yuval Steinitz told Tel Aviv radio.

The main obstacle to the long-delayed development of Israel’s giant Leviathan field was finally removed last Thursday when Prime Minister Benjamin Netanyahu signed a gas framework agreement after invoking Article 52 of the restrictive trade practices law to bypass a ruling from antitrust authority.

Delek, which is a partner in both Leviathan and the Cyprus Aphrodite field, announced shortly thereafter that it would “carry out the necessary actions for the rapid development of the Leviathan field and the expansion of the Tamar field”.

Given the ongoing conflict in Syria and the fact that Israel does not have a liquefied natural gas (LNG) plant, supply of Israeli gas to Turkey would probably have to go through the Exclusive Economic Zone (EEZ) Republic of Cyprus, which has no diplomatic relations with Turkey.

Under Article 79 of the UN Convention on the Law of the Sea (UNCLOS), “all States are entitled to lay submarine cables and pipelines on the continental shelf”. At the same time, “The delineation of the course for the laying of such pipelines on the continental shelf is subject to the consent of the coastal State.”


However, neither Israel nor Turkey are parties to UNCLOS. Nor is the US, the home of Noble Energy, also a partner in both Leviathan and Aphrodite.

SOURCE