Insight

Israeli natural gas: obstacles and opportunities

22 June 2016

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22 June 2016

Israeli natural gas: obstacles and opportunities

Report summary

A Final Investment Decision has not yet been taken on Israel’s 22 tcf offshore deepwater Leviathan gas field. The domestic market is too small to absorb Leviathan's volumes alone and a full scale development will rely on export agreements. Egypt, Jordan, and Turkey are potential markets, but each comes with unique and different challenges. If domestic challenges can be ironed out before larger export Gas Sales Agreements (GSAs) are finalised a phased development is likely. An initial smaller phase of Leviathan targeting the Jordanian and Israeli markets, would be followed by a second expanded phase if larger export GSAs are signed.

The Eastern Mediterranean gas puzzle
- It all started with Tamar
- ...and exploration success continued with Leviathan
Obstacles and opportunities
- Regulatory barriers remain a wildcard
- Increased supply competition from Cyprus and Egypt
- Domestic gas demand growing
- Friendly neighbours?
- Solving arbitration key to unlocking export routes
- Unification hurdles
  - Regulatory barriers remain a wildcard
  - Mitigating risk