Israel’s biggest gas discovery, potentially turning the fuel importer into an exporter, is prompting a race by nations from Lebanon to Turkey to tap similar deposits in disputed waters of the East Mediterranean.

Noble Energy is developing the Leviathan and Tamar fields off Israel that hold about 30 trillion cubic feet of gas, more than triple the UK’s remaining reserves and worth about $670 billion at today’s prices. The Houston-based company also is behind the Aphrodite discovery off Cyprus.

With the US estimating the region holds about 122 trillion cubic feet of gas, enough to supply the world for one year, Lebanon and Turkey stepped up prospecting. Territorial disputes will have to be resolved first or the potential will remain untapped.

“All sides are looking at the eastern Mediterranean in a new light, but at the same time border disputes remain very important,” said Charles Gurdon, managing director of London- based risk assessor Menas Associates. “In the end, most of these cases will have to go to international arbitration.”

Countries in the region will have to temper disputes over maritime borders and sovereignty before companies such as BP, Total and Royal Dutch Shell can realize its potential as an export hub, according to the Observatoire Mediterraneen de l’Energie, an industry group.

“Joint exploitation of resources may change the whole political situation for the benefit of the region,” said Sohbet Karbuz, an oil and gas director at OME. “Energy can also become an extension of politics by other means.”

The Lebanese-Israeli maritime border remains undefined

Lebanon and Israel have no defined maritime border, while Turkey doesn’t recognize the Greek Cypriot-led government of the Republic of Cyprus and relations with Israel have soured since Turkish activists died on a Gaza-bound flotilla two years ago. Tensions boiled over when Turkey sent an exploration vessel accompanied by warships and jets to stop Cyprus drilling for oil and gas last year.

“The sides are implacably opposed, whether it’s northern and southern Cyprus, whether it’s Turkey and Cyprus, whether it’s Israel and Lebanon,” said Gurdon at Menas, which advises Exxon Mobil Corp., BP and Chevron Corp. among others. “In the end, people want to determine where the territory starts and stops.”

Cyprus will award permits covering 12 offshore blocks south of the island in its second licensing round, open for bids until May, according to Solon Kassinis, director of the energy service at the Ministry of Commerce, Industry and Tourism. Turkey also plans to start drilling for oil off northern Cyprus later this month, Energy Minister Taner Yildiz said in Istanbul today.

Egypt is planning to hold a licensing round in the Mediterranean after the Leviathan and Aphrodite discoveries, Gurdon said in a presentation in London today.

Gas discoveries in the Mediterranean abundant

The East Mediterranean could become the “second North Sea” following Cyprus’s first offshore gas discovery last year, Kassinis said.

“The Lebanese have systematically refused to talk to us about border issues, whether territorial or maritime, and have unilaterally submitted their claims to the UN,” said Yigal Palmor, an Israeli Foreign Ministry spokesman. “We therefore have no choice but to submit our own claims to the UN as well, but the preferred solution is obviously direct negotiations.”

The North Sea, where Britain and Norway pump most of the oil and gas, is the world’s sixth-largest supplier of crude. While it still holds more than 26 billion barrels of oil equivalent resources, extraction peaked at the beginning of the last decade, UK government data show.

Israel, Cyprus considering pipeline

As North Sea production declines, energy producers are looking to other regions, including the Mediterranean, to meet rising gas demand as countries seek alternatives to Russian supplies.

Cyprus is working with Israel, 480 kilometers south across the Mediterranean Sea, on the potential construction of a pipeline to connect their gas fields. The link would allow the countries to meet domestic demand before liquefying the fuel for export, Israeli Prime Minister Benjamin Netanyahu said on February 16.

Israel is examining plans to ship liquefied natural gas, or LNG, as far as Asia after 2018, said Gerry Peereboom, a director at Noble Energy. Israel may also pump gas to Egyptian LNG plants, said Raafat El-Beltagy, deputy chairman of Egyptian Natural Gas Holding Co. LNG Exports

“Israel is now in the position to decide whether they’ll allow the companies that hold these gas resources for export to the international market,” said Richard Quin, an analyst on the Middle East and North Africa at Wood Mackenzie Consultants Ltd. “The challenges of exporting LNG from Israel are quite substantial. It could easily be a decade for exports actually to happen.”

The Aphrodite field spans waters between Cyprus and Israel. Noble and other international oil companies have stayed away from northern Cypriot waters as tensions with Turkey persist, maintaining divisions that have split the island since Turkey invaded the north in 1974. Turkey has said development projects should await resolution of Cyprus’s political status.

“The issue of Turkey remains absolutely critical, because Turkey doesn’t recognize Cyprus’s rights” to award licenses, Menas’s Gurdon said. “Turkey may adopt gunboat diplomacy and it may be difficult for Cyprus to search for and develop fields which are close to northern Cyprus.”

The European Union, which only recognizes the Republic of Cyprus, has withheld elements of Turkey’s EU membership talks as it calls on the country to acknowledge the island nation and help resolve its ethnic divisions. Turkey has said it’s open to collaboration to exploit the region’s resources and market the fuel abroad.

Turkey seeks to maintain status as energy gateway

“Potential cooperation may at last bring peace and stability to the region,” said Ayse Berris Ekinci, acting deputy director for energy at Turkey’s Ministry of Foreign Affairs. “Turkey represents the safest, most feasible and affordable gateway for the eastern Mediterranean natural gas resources to the European markets.”

Turkey’s state oil producer Turkiye Petrolleri AO struck an agreement with Shell in November to explore off the city of Antalya, away from Cypriot waters. Turkey has also received interest from companies including Exxon Mobil, BP, Chevron, Total and ConocoPhillips to explore in its east Mediterranean waters, according to the Energy Ministry.

Cyprus is due to take over the EU’s rotating presidency on July 1, potentially boosting its clout in negotiations. The island’s Aphrodite discovery is only 65 kilometers from Israel’s Leviathan field, the world’s biggest offshore gas find of 2010. The Tamar field off Israel, discovered a year earlier, is due to start output next year.

“The latest discoveries will certainly be a source of dialogue between the countries,” said Rob West, a London-based oil analyst at Sanford C. Bernstein & Co. “It’s just not clear whether the dialogue will involve disputes over resource entitlement or rather cooperation.”

Claims over gas fields in the region’s Levant Basin extend to Lebanon, Israel’s northern neighbor and 100 miles across the sea from Cyprus.

Lebanon has said some Israeli fields may stretch into its waters and has asked the United Nations to intervene to prevent a conflict over exploration areas as the country gears up for its first offshore oil and gas bidding round this year. Lebanese militant group Hezbollah, which fought a war with Israel in 2006, has repeatedly pledged to protect the nation’s offshore resources.

International negotiations with Iran went nowhere on Friday. More discussions are schedule for May, though Israeli Prime Minister Netanyahu said this was a gift to the Iranians who will have more time to enrich uranium and accelerate their weapons development program. “My initial impression is that Iran has been given a freebie,” said the PM during a meeting with U.S. Senator Joe Lieberman. “It’s got five weeks to continue enrichment without any limitation, any inhibition.”

No sooner had the fruitless talks ended had talk in Israel returned to the increasing imminency of war. “A major Israel TV station on Sunday night broadcast a detailed report on how Israel will go about attacking Iran’s nuclear facilities in the event that diplomacy and sanctions fail and Israel decides to carry out a military strike,” reports the Times of Israel. “The report, screened on the main evening news of Channel 10, was remarkable both in terms of the access granted to the reporter, who said he had spent weeks with the pilots and other personnel he interviewed, and in the fact that his assessments on a strike were cleared by the military censor. No order to strike is likely to be given before the P5+1 talks with Iran resume in May, the reporter, Alon Ben-David, said. ‘But the coming summer will not only be hot but tense.’….

“In the event that negotiations fail and the order is given for Israel to carry out an attack on Iranian nuclear facilities, ‘dozens if not more planes’ will take part in the mission: attack and escort jets, tankers for mid-air refueling, electronic warfare planes and rescue helicopters, the report said…..Ben-David said that if negotiations break down, and Iran moves key parts of its nuclear program underground to its Qom facility, the IAF ‘is likely to get the order and to set out on the long journey to Iran….Years of preparations are likely to come to realization,” he said, adding that ‘the moment of truth is near.’….The attack, the report said, would presumably trigger a war in northern Israel, with missile attacks (presumably from the Iranian-proxy Hezbollah in Lebanon). ‘There will be no tranquility and peace anywhere in Israel,’ Ben-David said. This could be the first full-scale war the IAF has fought in nearly 30 years, the report stated.”

While a summer war is a real possibility, the Israelis will also want and need to maximize the element of surprise, meaning a strike this spring is still possible. Then again, any number of events could intervene in the near future to thwart the need for a war, or thwart the Israelis’ ability to conduct an effective war with Iran. As noted several weeks ago, one of those events would be if Russian President Vladimir Putin intervened to warn Israel not to strike or risk Russian military intervention. Let us, therfore, continue to pray for peace in the epicenter, while we continue to gird ourselves and prepare for the possibility of war.

Moshe Arens is one of the most knowledgeable people in Israel today.  He understands Israel’s predicament as well as anyone, and that includes Prime Minister Binyamin Netanyahu.  Arens has served as Israel’s minister of defense and minister of foreign affairs, so when he speaks, we should pay careful attention.  On Tuesday, Arens explained the true meaning of Shaul Mofaz’s March 27 victory over Tzipi Livni for leadership of the Kadima Party:

Of course Shaul Mofaz won, and Tzipi Livni lost. But there was much more to the Kadima primary race than that. It was the “two-state solution,” at the forefront of Israeli political discourse for a number of years, that lost. It was the offer of more concessions to the Palestinians, whose most prominent advocate was former Kadima chairwoman, MK Tzipi Livni, that went down in defeat. The concession offers made by then-Prime Minister Ehud Olmert to Palestinian Authority President Mahmoud Abbas and by then-Foreign Minister Livni to then-senior Palestinian negotiator Ahmed Qureia were left in the dust in last week’s Kadima primary. That was the verdict implicitly delivered by Kadima party members, a verdict that echoed the feelings of many Israelis.

According to Arens, the Israeli public’s mood has changed dramatically as a result of the failure to achieve anything that even resembles peace despite repeated unilateral efforts by the Israeli government to win the cooperation of Palestinian leaders.  To buttress his point, Arens discussed these failed attempts to move the peace process forward:

1. The Oslo Peace Accords: Arens calls them “an abject failure.”

2. Ehud Barak’s unilateral withdrawal from Southern Lebanon in 2000: it led to the Second Lebanon War in 2006.

3. Barak’s attempt to buy off Yasser Arafat by offering him the Temple Mount and much more in Jerusalem: Arafat flatly rejected the offer and launched “an unprecedented wave of terror against Israeli civilians.”

4. Prime Minister Ariel Sharon’s unilateral withdrawal from Gush Katif in the Gaza Strip: it was a “grave mistake” because it led to “Hamas taking control of the Gaza Strip and the subsequent rain of rockets on southern Israel.”

5. The Arab Spring: it brought “Islamic fundamentalist rule to the Arab world” and “strengthened the skepticism of many Israelis regarding the presumed advantages of offering territorial concessions to our Arab neighbors.”

Those are good reasons for the Israeli public’s mood change.  Since the Oslo Peace Process began in 1993 and movement toward a “two-state solution” got underway in earnest, Israel has made concession after concession, and in return they have received nothing but rejection and more terrorist activity.  According to Arens:

The election that returned Prime Minister Benjamin Netanyahu to power three years ago was a clear indication of a growing disenchantment with the much-vaunted “peace process” among many Israelis. Livni’s defeat in the Kadima primary gave a stamp of approval to this trend, which has contributed to the surprising stability of the Netanyahu government. The current Knesset may yet set an Israeli longevity record. The strength of the political parties claiming that concessions will pave the path to peace is steadily dwindling.

The Israeli public is finally waking up to reality.  They desire peace because they have been at war, either declared or undeclared, since Israel was reborn as a state in 1948, and they are growing weary, but their Arab Muslim neighbors are committed to the eventual overthrow of the tiny Jewish state.  More than three decades ago, Palestinian President Yasser Arafat explained what is taking place as clearly as anyone could have:

Since we cannot defeat Israel in war we do this in stages.  We take any and every territory that we can of Palestine, and establish sovereignty there, and we use it as a springboard to take more.  When the time comes, we can get the Arab nations to join us for the final blow against Israel.  (Yasser Arafat speaking on Jordanian television, September 13, 1993 — the same day the Oslo Peace Accord ceremony was held in Washington, D.C.) 

Peace for us means the destruction of Israel.  We are preparing for an all-out war, a war which will last for generations.  Since January 1965, when Fatah was born, we have become the most dangerous enemy that Israel has[.] … We shall not rest until the day when we return to our home, and until we destroy Israel.  (El Mundo, Caracas, Venezuela, February 11, 1980)

Even though Arafat died in 2004, the Palestinians are following his playbook to the letter.  They are simply biding their time, taking what Israel gives them, offering nothing in return, and waiting for the day when “the Arab nations … join us for the final blow against Israel[,]” just as Arafat said.  But the Middle East situation is more complicated than that:

• An increasingly      belligerent Iran is seeking to develop nuclear weapons and long-range missiles to deliver them despite assurances to the contrary, is attempting to establish hegemony over the Middle East and North Africa, and has declared that it intends to “wipe Israel off the map.”
• China is siding with Iran and attempting to increase its influence in the Middle East.
• Unrest in Syria is      rapidly developing into a full-blown civil war despite former Secretary-General of the United      Nations Kofi Annan’s efforts to bring an end to the fighting, Syrian      President Bashar al-Assad may not survive, and Islamists are positioning themselves to take control.
• Russia is flexing its      muscles in the Middle East, siding with Iran and Syria, and challenging Western powers, most notably the United States.
• President Obama is      perceived as weak in the Middle East, thus emboldening Islamists      throughout the region and Russia and China.
• Egypt is poised to elect      an Islamist president, and Egypt’s parliament has declared that Israel      is Egypt’s “number one enemy.”
• Turkey’s Prime Minister      Recep Tayyip Erdoğan is leading his nation down an Islamist path and trying to re-establish the Ottoman Empire. In the process, he is turning against Israel      and winning accolades from the Muslim Brotherhood in Egypt.

These facts help to explain why there is growing skepticism among Israeli citizens about the prospects for peace in the Middle East, and they cause bleak reality to come into crystal-clear focus.  That’s why Israelis are turning away from Tzipi Livni and politicians in Israel like her who preach peace despite the mounting evidence.  As unpleasant and undesirable as this may seem, the Israeli people are realizing that now is the time to plan for war, because it may be inevitable.

Iranian spokesmen are maneuvering for a postponement of the nuclear negotiations with world powers set to take place April 13-14 in Istanbul, debkafile’s Iranian sources report. It is feared in Washington and Jerusalem that Tehran is working toward two goals: To have the venue removed from Istanbul and to buy a couple more months before the diplomatic crunch, considering that the US and Israel are treating the April talks as the last chance for diplomacy to reverse Iran’s drive for a nuclear weapon. A postponement would therefore delay any military option that Israel or possibly America would choose to exercise.
The Iranians want the site moved to Moscow, Vienna or Geneva, a change opposed by Washington because it would consume several more months before the talks got started. Tehran is also signaling through Moscow that it is not prepared for the diplomatic dialogue to take place under military threat or economic sanctions.
While Israeli Prime Minister Binyamin Netanyahu refrained from mentioning military options in presenting his government’s three-year record Tuesday, April 3 – ignoring the three large-scale military movements afoot by the US, Russia, Turkey, Syria, Greece – and Israel itself,  Moscow is talking about an imminent  military conflagration as a result of the continuing US and Israeli military buildup in the Persian Gulf.
Russia’s Deputy Foreign Minister Sergey Ryabkov said Tuesday, April 3: “The Middle East standoff could boil over into military action at any moment.” Referring to the massing of military and naval forces in the Persian Gulf, he said: The pot can explode if the diplomatic valve is not opened.”
He made no mention of the scheduled April 13-14 nuclear talks. One of the most influential figures in today’s Tehran Mohsen Rezaie was more explicit: “Given the fact that our friends in Turkey have failed to fulfill some of our agreements, the talks… had better be held in another friendly country.”
He did not specify which agreements Ankara had failed to meet, but his rejection of Istanbul as the venue for the talks was unqualified.
Strong criticism of the Erdogan government also came from a senior member of Iran’s parliamentary foreign policy and national security commission Esmaeel Kosari. He said during a visit to Azerbaijan:”Turkey serves as the United States and Israel’s messenger and mediator. The Turkish government will be hated by its citizens if it continues this role.”

In Iran’s political culture, neither of these men would have spoken without a green light from the office of the all-powerful supreme leader Ayatollah Ali Khamenei.
Kosari’s mission in Baku was to investigate recent reports that Azerbaijan had given Israeli permission for its bases to be used by the Israeli Air Force in an attack on Iran.
Early Wednesday, April 4, Iraqi officials suddenly offered Baghdad as the venue for the forthcoming world power talks with Iran.
The US and Israel are certain to reject this offer because it would give Tehran the important edge of a key diplomatic event taking place on pro-Iranian soil.