Two decades after Israel opened the waters off its shore in the Mediterranean for natural gas drilling, and a decade after Houston-based Noble Energy announced discovery of the massive, 8.4 trillion-cubic-foot deep-water Tamar natural gas field in the eastern Mediterranean, Israel is now a player in the energy field. But like everything else in the Middle East, the increased supply complicates things. According to a recent New York Times story, the surplus presents a challenge since Israel now has more natural gas than it can use or readily export. And it is looking for better relations with its neighbors as a result of the boon.
Two years ago, Israel appointed Shay Luvshis, a lawyer with experience in Israel’s macro-economic policy and regulatory processes, as the country’s first consul for energy and economic affairs. He is based in Houston. Luvshis recently spoke with The Jewish Week in his Texas office. This is an edited transcript.
Q: Why did Israel need to establish a new diplomatic position, one focusing on energy?
The need came from the realization that what was discovered until today is only a third of the potential of what is there to be discovered — gas and oil. In order to develop this, we are reaching out to international companies. The best way to establish relations is to be on the ground [in the United States], not to work remotely [from Israel].
Would David Ben-Gurion and the country’s other founders believe that such an energy consul would someday be a possibility?
No. There is a joke in Israel that Energy Minister Yuval Steinitz uses: That when he was a kid, all of our neighbors would throw a stone [on the ground] and oil comes out — it’s all around us but not in Israel. For 60, 70 years we were very frustrated by that. The joke was that we were just looking in the wrong place; we were looking onshore instead of offshore. It’s only the beginning of the journey.
No one imagined it; some people thought there might be a little bit, but not this huge amount. This is something the Israeli public is still grasping with — the notion that Israel has become a regional hub of oil and gas. For 60 years, Israel’s economy was booming, but it was thanks to our brain power and technology and innovation. Suddenly we got a gift, a present from above. We are an exporter to Arab countries. Now we are exporting gas to Jordan. We are in the final stages of building a pipeline to Egypt.
Another huge project we are taking very seriously is to export gas to Europe. The European Union, the largest energy market in the world, allocated 100 million euros for a feasibility study for this project. It’s economically viable, technically viable. We are aiming for the year 2025 for the first gas to flow in this pipeline.
People [who remember the Israel-Arab wars] from the ’60s and ’70s are saying, “Where’s the catch? This cannot be.”
For years it was an axiom that one reason many nations favored the Arab side in the Israeli-Arab conflict was the energy resources that many Arab nations provided. Has Israel’s discovery of natural gas changed the political equation?
Definitely. If a country or a region is importing natural gas or oil from a certain country, the relationship between those countries is getting closer. That’s a given.
You have said that Israel’s goal is to reduce reliance on coal consumption — a highly polluting energy source — by the end of the next decade. How realistic is that goal?
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It’s actually before the next decade. Israel ranks as the No. 2 country in the world for the pace of moving … to natural gas. Until three years ago, 50 percent of Israel’s electrical energy was consumed from coal. Today we’re at 25. By 2023, we’re going to lower it down to zero. The government decided to close down coal plants in Israel and move to natural gas. By 2023 we are not going to allow the import of fuel-driven cars. There will be only electric cars or hybrid cars. We are in line with the rest of the world.
Seeing Noble’s success in developing its gas fields off the Israeli coast, why are other firms still reticent about signing similar contracts with Israel? In other words, why is Israel still a tough sell?
Israel is not alone. Other countries are also promoting [energy] prospects. We are in a competitive environment. We are relatively new [in the energy field]. Other markets in the world have been there for over 100 years.
What is the most important aspect of Israel’s growing energy independence: its ability to meet its own energy needs, its effect on the country’s economy or its role in improving the country’s political and economic strength in the Middle East?
The economic value is huge — the treasury of Israel gets billions and billions of dollars. But the regional geopolitical aspect [of improved relations with Israel’s Arab neighbors and improved relations with some European governments] is the most important in my opinion.
Israel — the “Start-up Nation” — has also made great advances in water desalination. First water, then natural gas. What’s next?
Because we are based in Houston, the energy capital of the world, we are focusing a lot of our efforts in implementing energy technology, transferring our technology, our know-how, to various fields — finance, analytics, service providers.
For a long time, Jews liked to make jokes that Moses led the Israelites to the only country in the region without oil – or other natural resources. Is anyone laughing now?
A lot of people are eating their hats — it’s a Hebrew expression [like eating crow]. Nobody’s laughing.
