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If you want to get acquainted with the “energy crisis” – and why Israel will not become acquainted with this concept due to the abundance of gas in its possession – you need to see what is happening in Europe, especially Germany, one of the most economically powerful countries in the world. Then we must remember all the Bolsheviks, populists and anarchists who stuck countless sticks in the wheels of the development of the gas economy in Israel, until reality and common sense prevailed.
Well, on June 16, the German government called on consumers to use gas sparingly. A week later, on June 23, it had already announced an increase in the energy crisis alert to 2 out of 3. If Germany moves to the third phase of its emergency plan, the government could start allocating gas supplies to factories and households. Sounds imaginary, but that’s the reality.
The war in Ukraine has almost made headlines, in the country at least, but the Russians are using gas as an economic weapon and have reduced the quantities of gas supplied – which has led the Germans to the emergency declarations. Gina Cohen, a global expert on the energy market, especially natural gas, estimates that it will take a long time to get rid of dependence on Russian gas. “We are talking about 2024, but it may take longer,” she warns.
It should be understood: two-thirds of German gas comes from Russia – a dependency that Germany has not been able to diversify or prepare for in advance due to the change in circumstances. This is a bad, very bad example, of mixing politics, war and economics.
“Germany is a good example of the energy crisis in Europe for several reasons,” says Cohen. “First, it is the largest consumer of natural gas in Europe and it produces very little. It consumes around 90 BCM and it produces only 5. Therefore it is very dependent on gas supplies from Russia – about two thirds of the gas imports are from Russia and the rest from Norway and the Netherlands. And it does not need facilities of natural liquefied gas.
“As you know, there are two ways to bring natural gas: in a pipe from place A to place B or as a liquid. If there is gas coming in the pipe, then we have more obligation to take it and we also have an energy security that the gas will reach us The quantity in the pipe to another place.If we have liquefied natural gas, there is much more flexibility, for example in case we are under pressure, we have needs for more gas and we are willing to pay more, then we can buy.
“The Germans thought it should not be done, so they are very dependent on Russia at the moment. Hence, they recently announced a Level 2 alert, which happened mainly because the Russians cut more than half the gas supply through the pipeline coming straight to Germany – which gave it energy security in the past.
“The Russians initially cut 40% of the supply through this pipeline, then 50% and now 60%. They claimed it was for technical reasons and sent the parts in need of repair, they said, to Siemens in Canada, which refuses to return the parts due to sanctions on Russia. Know if indeed these are technical problems or probably other reasons, in any case the Russians do not deliver the goods.
“In addition to this problem, there was also a problem in one of the liquefied gas facilities for export in the US, as a result of which US supplies fell by almost 20% and will continue to fall until the end of the year. At the very least, we will fix the problem. Of gas, they work on very small percentages, and then if something small, one facility in the US, falls, the whole market goes into crisis.
“If there is a malfunction or very extreme weather, these affect the market and cause a big change. Then Germany, which six months ago said it was advancing even further with renewable energies, that it does not want gas and it also does not want nuclear power plants, is now the eager country. Most looking for gas wherever possible.
“One of the most interesting things in Germany is the issue of storage: the amount of storage in Germany is 23 BCM, and it provides only a quarter of what they need during the year, and storage in Europe averages 55%, so Germany is in trouble. Today its energy consumption, not just electricity, is divided. “Oil – about 32%, gas – about 27%, renewable energies – about 16%, coal – about 18% and nuclear – about 6%.”
So what can the Germans do anyway?
“They are looking for gas to buy wherever possible. They are also considering withdrawing from the possibility of closing the nuclear stations – they closed three years ago and are about to close three more. But it is too late because these stations are old, and to continue with them had to be properly maintained before. Years and did not.
“They also did not buy the fuel for nuclear energy – which shows the importance of long-term policy, both in Europe and for us, and this is also the message I wanted to convey in the Knesset a week ago, that long-term energy policy should be pursued. We want to go in one direction and suddenly change direction – it does not work that way and it does not move fast.
“The changes are very slow, so you do not have to make drastic decisions, move very slowly and with great caution. The Germans decided to close the nuclear stations and come back, but it is no longer practical, so what do they have left to do? They have two drastic things left to do. They are increasing electricity production from coal, and in terms of gas they are doing something positive in my opinion: they are going to rent 3-4 ships for liquefied natural gas, because an onshore facility takes years. But that’s half the work, because they need suppliers to buy liquefied natural gas. There are ships, but you also have to find gas to buy. “
And it costs them dearly, of course.
“They pay a lot of money for gas. A week ago, gas prices fell below $ 30 per unit of heat, and this week they have already jumped to about $ 39 per unit of heat (reminder: in Israel, prices are about $ 5 and less – at present). Germany now fears the possibility that the Russians will completely cut off gas supplies to Europe. They are unlikely to do so, but they can certainly further lower supply percentages and use gas as a weapon.
“I would like to point out one more thing about the Russians: they are making a lot of money from a year ago. Both on gas exports, on oil exports and on other oil products, such as fuel oil and diesel, even after they reduced the quantities of gas, because prices went up significantly. “Although the Russians are giving a big discount to overcome the sanctions, like the Chinese and Indians – a discount of around $ 30-40 a barrel. This is going to be a record year for them in terms of profits.”
Record year despite sanctions.
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There is no doubt about it: Israel has a much larger amount of gas than it can utilize. Exporting gas sounds simple, but the reality is always much more complex, and Cohen has previously elaborated in extensive work on natural gas in the eastern Mediterranean basin all the issues surrounding exports. This requires cooperation between many parties, including of course the gas suppliers, state authorities, gas transmission networks and transit countries, foreign government bodies and customers abroad.
Israel’s export policy employed the government and regulators as early as 2011, and after several committees and decisions, the government in January 2019 approved the decision to keep 500 BCM of gas for domestic consumption for the next 25 years. The excess quantities, to a fairly similar extent, were allowed for export, subject to obtaining a gas export permit from the Ministry of Energy.
In June 2021, an inter-ministerial committee published for the public comments its updated positions on the Israeli gas economy, as well as on the possibility of exporting gas. The committee concluded that there is a high chance that large amounts of gas discovered in Israel’s maritime territory will never be utilized, and that there is a window of opportunity of 20-25 years for the commercialization of the gas. Accordingly, encouragement and government promotion of gas exports was recommended. However, as usual in our places, the report did not include practical recommendations for implementation.
Israel’s two export destinations are currently Jordan and Egypt. It should be said in a wavy bristle: Israel is saving Jordan from an energy crisis and selling it gas at affordable prices, not to mention dreamy, much lower than it should have bought in the world, despite protests on Jordanian streets over the agreement. “Israel’s exports to Jordan save them, otherwise they would have had to import liquid gas at a higher price of $ 30-40,” Cohen notes, with estimates that export prices to Jordanians are only around $ 7-8.
The major agreement was signed in 2016 between Whale Partners and the Jordanian Electric Company for the sale of gas in a total amount of 45 BCM for a period of 15 years. The credit rating agencies see it as a contract of strategic importance to Jordan, because the country has no local energy sources other than renewable energies, and is therefore highly dependent on the import of relatively expensive liquefied gas.
The second destination is Egypt: in September 2019, agreements were signed between Leviathan and Tamar partners and the Egyptian company Dolphinos, which has changed its name since then. The agreements regulate gas exports to Egypt in the amount of 60 BCM from Whale and about 25 BCM from Transducer by 2034.
The agreement allows the said gas to be marketed to the local market or to liquefied gas export facilities. The gas is exported from Israel through the NMG transmission system until it is connected to an EMG pipeline. The gas is then transported through a pipeline that connects to the Egyptian transport network to one of two destinations – end consumers in Egypt or one of the liquefied gas export facilities.
“It’s a shame. For years we have been talking about exports, and we have not made any progress in another channel for exports,” says Cohen. “And the only channel we have for Egypt, and it has the ability to export 7 – 7.5 BCM per year. Once we build the maritime pipeline between Ashdod and Ashkelon, about another year, we can increase it. Al-Arish to Port Said has a transfer capacity of 10 BCM, so no matter what is done, everything will reach the point of Al-Arish, and then it is possible to export a maximum of 10 BCM. This is a nice and large amount, but it can be increased.
“And another thing to keep in mind: as soon as a shark reservoir starts producing gas – initially 3 and then 6.5 BCM per year, with Tamar producing 11 BCM and Whale producing 12 BCM per year, which is certainly enough for the local market – we need to move on to the next step: order another 10 BCM for export. And even BCM 12, because Whale’s infrastructure allows for double production.
“I understand that the export infrastructure we are currently testing is a straight line at sea from Whale to one of the drainage facilities in Egypt or the construction of a drainage facility here. The high school and the European markets and will allow up to 20 BCM per year to be transported from Israel and Cyprus to Europe. “
It should also be remembered that Israel has a great advantage: the practical owner of the Leviathan and Tamar reservoirs (the operator) is the energy giant Chevron – with knowledge, connections, financial backing and capabilities in the global market. If you want a player in establishing infrastructure and export options, Chevron is without a doubt one.
And what about the export agreement with the EU – is quite theoretical in the meantime?
“What was signed with the European Union is not an agreement, but a memorandum of understanding, and it is not a trade agreement, but an agreement between countries. It’s good, because an agreement between countries is required at first, Great. “
Musi Raz (Photo: Yonatan Zindel, Flash 90)3
I have known Cohen for many years. There is no honest and no knowledgeable person in the field of natural gas. Whenever I want to simplify for readers the very complex energy markets, I turn to her, because there is a huge appreciation for her in the market on the part of all the players, and she is a sought-after lecturer in Israel and around the world.
Despite this, last week Musi Raz, chairman of a special Knesset committee on the wealth fund, “threw” her out of the committee, after he treated her rudely and told her: “Shut up.” And in the values of freedom of expression, until someone aligns with their doctrine.
Raz explained his ugly behavior towards Cohen in this way: “… presenting content that denies the existence and severity of the climate crisis is a dangerous deception …”. In other words, according to Raz’s method, those who have a heretical opinion in inflating the climate crisis – and there are quite a few in Israel and around the world – should be “thrown away”, they must shut up. What is your name, MK Raz? What is your specialty?
I very much hope that this is the last debate that Raz will have from now on, and that he will find himself outside the next Knesset. There is no place for Knesset members who do not respect freedom of opinion. I am also very happy about the decline of all the left-wing organizations, Sharaz is willing to shut up to people to please them and to get some kind words from them.
The way in which this anarchist group, which navigates time-the-Marker, settles accounts with anyone who does not align with it, with the same religion of climate crisis, or in the past the religion of opposition to the gas layout, no longer excites anyone. The gas layout worked excellently, for the benefit of the public, as opposed to the whole bunch proving itself to be working for the benefit of the public. Absolutely not, she works but only for herself and against the public while demonstrating economic ignorance.
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