India Looks At Israel Gas

India and Israel, already partners in areas such as defense, counter-terrorism and agriculture, could extend it to gas in the wake of huge findings in the so-called Levant Basin in water 1,675 meters deep off Israel’s coast.

The Israeli discovery, made in 2010, goes some distance towards solving a knotty political problem for India as well as taking care of some of its energy needs, as well as altering slightly the balance of energy production in the middle east and making Israel a player.

The growing exchanges between the two countries, however, have drawn the attention of the All-India Mulsim Majlis-e-Mushawarat, an umbrella group of Indian Muslim organisations representing the large Indian Muslim community, who say they are "deeply pained and alarmed at the steadily growing Indo-Israeli relations. The latest episode comes in the shape of the visit of the Honorable Minister of External Affairs to Israel during which he has talked of cooperation against “international terrorism”, raising Indo-Israeli trade to US$15 billion from the current $ 5 billion, allowing Israel to open a consulate in Bangalore, signing an extradition treaty and announcing that soon a Free Trade Agreement too will be signed between the two countries. Reports say that a number of other Indian union ministers are in the wings to visit Israel."

However, driven by US demands, India has been seeking ways to cut down on energy imports from Iran and to build on relationships with Saudi Arabia as well as other parts of the Middle East and Africa. New Delhi’s other efforts to procure natural gas via pipelines from Iran, Myanmar or Turkmenistan are also stuck due to multiple reasons related to security, transit fees, competition from China and strategic factors.

Israel and India have explored possibilities of Israel exporting gas to India, given its rising needs, especially in the wake of inadequate domestic output. Gas consumption is increasing rapidly across sectors in India that include auto, power, industry and households.

The offer of gas to India was made by Israel’s minister of finance Yuval Steinitz during his New Delhi visit last month, when he met with high-ranking ministers and officials, including finance minister Pranab Mukherjee and India’s national security adviser Shivshankar Menon.

Steinitz has been quoted in the media to say that Israel and India engaged in talks about a potential gas deal. “Israel will be to receive delegations from India to discuss the issue,” he said.

Indian and Israeli officials again reportedly discussed ways of getting the gas to India last week, when foreign minister S M Krishna’s visited Jerusalem. The gas find is not without its problems. Lebanon has claimed the basin may extend into Lebanese waters although no action has been taken as yet. The two countries have fought four wars since 1949 and have had long periods of hostility.

Although Israeli officials say the Dalit and Tamar gas fields are within Israel’s contiguous economic zone, Israel has never signed nor ratified the United Nations Law of the Sea, promulgated in 2002, which is designed to set sea borders between maritime nations. CNOOC, China’s National Offshore Oil Corporation, which has energy concerns equal to India’s, is also negotiating an interest in the Tamar field.

Win Win Scenario

Though Israel has been an energy deficient nation for years, good gas potential has been discovered at the Leviathan and Tamar fields over the last couple of years.

Leviathan field reserves are estimated at 16 trillion cubic feet of gas, valued over US$160 billion, with production expected in 2016 – one of the biggest offshore finds in more than a decade, according to industry analysts. Tamar reserves stand at 8 trillion cubic feet, with production expected next year.

Israel is today estimated to be sitting over 400 bcm of gas. The bonanza, off the country’s north coast, has the potential of earning the country huge export revenues.

India, meanwhile, meets bulk of its oil and gas needs via imports. Over the recent years the country has been seeking to diversify its energy import basket to reduce dependence on a few nations. In the case of gas India is working with Algeria and now Israel beyond the usual imports from Qatar and Oman.

India’s gas demand-supply gap has turned out to be much more than envisaged due to the failure of Reliance Industries Limited (RIL) KG-D6 block to meet the gas output envisaged. The gas being produced at KG-DG is less than half the 80 mmscmd that was predicted.

India's natural gas output, meanwhile, is about 120 mmscmd while demand stands about 220 mmscmd and expected to double in five years time. The country imports about 45 mmscmd expensive LNG that still does not take care of the needs.

New Delhi is thus backing efforts to tap unconventional gas such as coal bed methane, underground coal gasification and shale. Gas from Israel is an option that India does not want to lose out.

India-Israel Ties

Though relations between India and Israel have been impacted by the complex Arab-Palestine politics, Jerusalem and New Delhi now share a good comfort level in doing business, with bilateral trade over US$5 billion.

One reflection of strong ties between the two countries is the rising defense supplies by Israel to India.

Over the past few years Israel has matched and overtaken India’s traditional arms suppliers Russia, Sweden, France and UK, in the supply of armaments that have ranged from missiles to air defense systems, missiles and radars.

Progressive Indian states such as Maharashtra, Himachal Pradesh, Haryana and Punjab, meanwhile, closely collaborate with Israel in agriculture, horticulture, water management and sprinkler systems.

These positive developments have co-incidentally happened even as Washington has removed sanctions on export of dual use technologies to India that harked back to the Cold War era.

Impositions connected to India testing nuclear weapons in the 70s and again in the 90s have also been withdrawn.

Over the past five years, America has opened doors to India to purchase US armaments, nuclear reactors to produce electricity and is closely involved with New Delhi’s efforts to produce shale gas.

India and America have grown closer as strategic partners in the region to nullify the influence of China, even as Arab nations have opened channels of communication with Israel.

America also does not want to lose out on the enormous potential of doing business with emerging economy India.

In this context, Indo-Israel energy relations are sure to be endorsed by America that has otherwise opposed India’s efforts to tap the enormous hydrocarbon resources of Iran.

Washington has issues with Tehran’s insistence on pursuing an independent nuclear program that it fears comprises building of atom bombs. Due to pressure from America, India has opted out of the ambitious Iran-Pakistan India (IPI) gas pipeline as well that Iran and Pakistan continue to pursue.

The option of shipping LNG from Iran has also not worked out to the levels expected. Companies such as explorer Oil & Natural Gas Corp (ONGC) and private major Reliance Industries Limited (RIL) have consciously reduced their investment and oil and gas trade exposure with Iran to avoid inviting US sanctions.

It could be opportune for Israel to step in.

(Siddharth Srivastava is a New Delhi-based journalist. He can be reached at sidsri@yahoo.com)