Global Insight Perspective | |
Significance | Turkey and Israel have been in ongoing discussions to build a multi-use pipeline that would carry water, natural gas, oil, electricity, and fibre optics from Turkey's Mediterranean coast to Israel. |
Implications | More than just fanciful talk, the decision to conduct a feasibility study, together with Israel's progress in nearing a gas supply deal with Russia's Gazprom, moves the Turkey-Israel pipeline project a step closer to fruition. |
Outlook | A gas supply agreement between Gazprom and Israel, along with a possible expansion of capacity on the Blue Stream pipeline and Turkey's efforts to play peacemaker in the Middle East, could well propel the multi-purpose pipeline project forward, regardless of its economic viability or the results of the feasibility studies. |
Progress on the Pipeline Front
Senior officials from Turkey and Israel yesterday took another step towards implementing an ambitious multi-purpose pipeline project, announcing plans to conduct feasibility studies to underpin the potential construction of an offshore pipeline network that would carry water, gas, oil, electricity, and fibre optics from Turkey's Mediterranean coast to Israel. The multi-use pipeline project has been a frequent topic of discussion between Turkey and Israel, although there has been little progress to date (see "Related Articles" below). However, following a meeting yesterday in Ankara, the Turkish capital, with Israeli Infrastructure Minister Binyamin Ben-Eliezer, Turkish Energy and Natural Resources Minister Hilmi Guler said that the two countries had agreed to begin feasibility studies on the pipeline project.
Guler said that the feasibility studies, which would cost about 8 million euro (US$12.7 million), would be completed in 10 months, with construction of the pipeline—which would take an estimated three years to complete—likely to start soon thereafter. Despite the various rounds of talks, there are few specific details on capacity or volumes to be transported, although Guler said that the oil pipeline would be designed to carry at least 40 million tonnes annually (800,000 b/d). No cost estimates have been released either, but Guler pointed to the sense behind the scheme, nothing that it could reduce the time it takes to transport crude to eastern Asia. The energy minister also said that India is interested in joining the project for this reason, so a tripartite meeting of Indian, Israeli, and Turkish officials will be held within the next 10 days.
For its part, Israel, which faces a water shortage, is interested in purchasing water from Turkey, and Israel's talks with Gazprom on a potential gas supply deal would make the gas part of the multi-purpose pipeline key to the realisation of any such deal. Ben-Eliezer said yesterday that Israel is "very close" to reaching an agreement with Russia that would supply the Turkey-Israel pipeline with gas. Gazprom itself has proposed setting up a company in Turkey to participate in gas distribution on the Turkish market as well as build new storage facilities and co-ordinate the extension of the Blue Stream pipeline to Israel.
Guler said that Gazprom wants to expand capacity on the existing Blue Stream pipeline, which runs from Russia to Samsun on Turkey's Black Sea coast and has a capacity of 16 bcm, with the Turkey-Israel gas pipeline then effectively becoming "Blue Stream-2". Guler told reporters that Gazprom, which is Turkey's largest gas supplier, is keen to renew a contract under which the Russian gas giant supplies 6 bcm per year of gas to Turkey. The contract, one of three separate Russian gas supply deals with Turkey's state-owned pipeline operator BOTAS, is set to expire in 2011.
Outlook and Implications
Turkey has been trying to reduce its dependence on Russian gas by diversifying suppliers, but is also eager to realise its goal of being an "energy bridge" between suppliers and consumers, so Turkey could seek to clinch a new deal with Gazprom in order to underpin the Israel pipeline project. Turkey is also seeking to attract Russian oil supplies for the north-south Samsun-Ceyhan oil pipeline, which is under construction and will link Turkey's Black Sea and Mediterranean coasts, so the parameters of a potential compromise are in place, with Turkey agreeing to renew gas supply deals with Gazprom and expand the existing Blue Stream pipeline in exchange for a Russian commitment of oil supplies for the Samsun-Ceyhan oil pipeline and Gazprom's support in realising the multi-use Turkey-Israel pipeline project. Gazprom, if it is to realise a future gas supply agreement with Israel, will need this infrastructure put in place, as well as Turkey's co-operation as a transit partner.
There is a growing alignment of interests between Turkey, Russia, and Israel that is pushing the Mediterranean pipeline forward, but the project still faces a number of technical and financial hurdles, not the least of which is how much it will cost and who will pay for it. Whether the project is economically viable will be determined by the feasibility studies soon to get under way, but Guler signalled that the multi-use pipeline may go ahead is about more than commercial or economic interests. "Turkey sees this project as an initiative that will contribute to the peace and stability in the region; this is a peace project," he said.
Indeed, Turkish officials are taking an increasingly larger role in trying to broker peace efforts in the Middle East, including between Syria and Israel. Already, Turkey has hosted three rounds of indirect talks between Israeli and Syrian officials, with a fourth round planned to take place in the coming weeks. Ben-Eliezer acknowledged Turkey's efforts in this regard. "The Israeli people and the government are grateful for Turkey for its mediation in talks with Syria and for its contributions to regional stability," he said. Thus, political considerations could well trump economic realities with regard to the Turkey-Israel pipeline, meaning the project is likely to remain on the table irrespective of the result of the feasibility studies. Time will tell, however, if actual construction of the Turkey-Israel pipeline remains as elusive as peace in the Middle East.
Related Articles
Turkey: 24 October 2007: Multi-Purpose Oil, Gas, and Water Pipeline Scheme Connecting Turkey and Israel to Move Ahead
Turkey: 26 June 2007: South Stream Pipeline Threatens Turkey's Role in Gas Transit to Europe
Turkey: 1 May 2007: Electricity Link and Oil Pipeline Talks Delayed, as Turkey Suffers Political Turmoil
Turkey: 24 April 2007: Samsun-Ceyhan Pipeline Represents Turkish Gamble on Bosphorus Bypass Business
Turkey: 17 January 2007: Turkey, Israel Reach Agreement on Construction of Pipeline Network for Oil, Gas, Water
Turkey: 19 December 2006: Multi-Use Pipeline Connecting Turkey to Israel Proposed
Turkey: 18 September 2006: Eni Reaches Deal to Acquire 50% Stake in Turkey’s Samsun-Ceyhan Oil Pipeline
Turkey: 2 May 2006: Turkey Still Considering Plans to Build Undersea Gas and Oil Pipelines to Israel
Turkey: 2 May 2006: Turkish Government Says "Yes" to Samsun-Ceyhan Oil Pipeline
Turkey: 7 November 2005: Turkey and Israel to Study Gas Transportation Project for Russian Supplies