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Tuesday, 26 April 2016 12:00

“We have three options to export gas”, - Dr. Yuval Steinitz, Minister of Energy of Israel Featured

Caspian Energy (CE): Mr. Steeinitz, one of the functions of the Supreme Court of Israel is to revise its own decisions in a broader composition of the jury. How necessary is it now to reexamine the decision to ban gas developments at the Leviathan field? How feasible do you consider a possibility of its cancellation as United States Secretary of Energy Mr. Moniz recently stated in is interview?

Dr. Yuval Steinitz, Minister of National Infrastructures, Energy and Water Resources of Israel: I completely disagree with our Supreme Court’s decision to make some changes in the 10-year stability commitment. In fact, the Supreme Court did approve 90% of the gas policy of the gas framework, but rejected only the stability clause. And I must tell you that although we have to respect this decision, I think it is completely wrong and full of contradictions. So, we will look for ways to disavow it. I am not enthusiastic to ask for another discussion in the Supreme Court with a broader panel of judges, because I think it will take too long. I have to fix it and move forward in few weeks, maximum in a two-month time, and if I appeal for another discussion in the Supreme Court, the whole process might take half a year or even more. So my intension now is to find a solution that will make us able to move forward, with some kind of the regulatory confidence that will be achieved.

Despite the delay in Leviathan’s development, the Leviathan Development Program has been already approved in the National Construction Committee, and we have already given the initial approval to the program. We do understand that time is ticking away, so we have to move forward. And of course in addition to Leviathan, we estimate that most of gas is still yet to be found. To this end, we hope to attract more and more international oil and gas majors with the extensive experience in offshore operations. In turn, Israel is ready to open its economic zone off the shelf of the Mediterranean Sea for exploration and subsequent development of fields.


CE: A delayed implementation of any upstream project, especially against the backdrop of the volatile oil market, usually leads to a multiple increase in its cost. How are the Israeli fields protected against such risks?

Dr. Yuval Steinitz: I think it is not a problem but an opportunity to develop Leviathan and other gas fields of Israel as costs for development of fields have nowadays considerably decreased due to the decline of oil prices and decline of gas prices. It will take several years to develop Leviathan, export supplies are about to start in 10 years and Leviathan will produce gas for approximately 70 years, if not more.

Thus, from the viewpoint of the low cost of the project, it is advisable to invest today. So I believe that from the national point of view, it is a long-term project and it should be vigorously promoted today.


CE: How would you evaluate the investment attractiveness of the energy sector of Israel?

Dr. Yuval Steinitz: I think it is very high because Leviathan and Tamar fields abound with large volumes of high quality gas and geographically we are close to the European market, which already now needs gas from the Middle East, Israel, Azerbaijan and other sources. At the same time the gas production in the North Sea is declining, so a necessity rises to offset this declination with new supplies. So I think that the energy sector of Israel is investment-attractive. 


CE: What would you evaluate the situation with energy security of Israel?

Dr. Yuval Steinitz: Usually I do not think that the situation with security will really affect the energy sector. You know, despite security threats and problems in the Middle East many international companies like Google, Microsoft, Intel, Apple, Cisco, IBM and many others are heavily investing in Israel. They have invested in Israel for 30-40 years and always benefited and had success with the investments in Israel. I think this goes with the energy sector as well. Israel has showed itself good economically despite the security challenges. So I do not think that the security challenges of Israel and Middle East should affect the energy sector in a bad way. I believe that if you ask the general directors of big companies, you know in the high tech industries and also other industries, they will tell you that investing in Israel was one of the best investments.


CE: What will be major areas of the export policy of Israel? Which routes are more economically sound?

Dr. Yuval Steinitz: We do not want to be dependent on only one route. Therefore we together with Egypt welcome the possibility of exporting Israeli gas to Egypt and also through the Egyptian LNG facilities to Europe. We and the Greek Cyprus support the possibility of building a pipeline in the Mediterranean going from Israel and Cyprus to Greece and from Greece to Europe. I hope to establish full diplomatic relations with Turkey, and we are working on it very hard. This intention was even stated at the end of the brief meeting with President of Turkey Erdogan in Washington two weeks ago. Once we establish diplomatic relations with Turkey, I think we will examine the possibility of building a gas pipeline from the Leviathan field, located in our economics water zone, to Turkey. The Turkish market is huge and through the Turkish market we can be connected to the Southern Gas Corridor going from Azerbaijan via the Caspian Sea and further to Turkey. This is another way to export Israeli gas to Europe. So we have three options to export gas. One is via Egypt, one more is via Cyprus and Greece and the third one is via Turkey, and I hope we will be able to use at least two of these options, if not three.


CE: How necessary is it to construct a nuclear power plant at a time when such countries as Germany, France, Italy and Scandinavian countries are decommissioning their nuclear reactors?

Dr. Yuval Steinitz: We don’t have any concrete plan to build nuclear power station in Israel although you know from the long term we might examine it, but currently there is no specific you know immediate plan to build nuclear power station, because we have enough natural gas, that can support our electricity production system of the next 30 or 40 years.


CE: What stage has the national program on efficient electricity consumption reached? What is the volume of energy and funds that Israel will be able to save within the framework of this program?

Dr. Yuval Steinitz: We do not stop progress we made, but we are going to do much more in the future. Just two weeks ago the government made a decision to allocate 800 million shekels ($212 mln), which is quite a lot, more than before in order to encourage energy efficiency. In the next few years you should see a lot of projects taking place.  We are very serious about it and we want to reduce the average electricity consumption significantly. And I am confident we will be able to achieve it, and we take it very seriously. We are going to invest a lot of money in it both directly both with government guarantee to projects of energy efficiency.

It is difficult to predict, but our target for energy efficiency is about 10 percent. However I do not want to be too specific for a longer term.


CE: In general, to what extent is it promising for Israel to develop wind and solar energy?

Dr. Yuval Steinitz: We have entered into commitments under the Paris agreement and very soon already this year we are going to publish tenders for more than 1000 megawatt of new solar electricity production. We are moving very fast and until 2020 we want 10% of the country electricity to come from renewable energy, mainly solar. And until 2030 we will be close to 20%, so again we are going to move very fast in the next few years.


CE: Would you like to add something to what you have already said?

Dr. Yuval Steinitz: I would like to add that I was very pleased to give an interview to the international Azerbaijan journal. I think the Azerbaijan-Israel relations are very important for both sides, they are good. And they should be improved in the future. We are cooperating in many areas and the economic ties can be developed further. And I am very grateful for the opportunity to speak to your readers and I hope to see many of them visiting Israel. 


                                                                                                                                                                               Thank you for the interview

Interview made by Olga Nagiyeva, Sabina Mammadova

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