American University of Beirut

East Mediterranean Natural Gas: A Lubricant for Israel’s Regional Integration Sai Englert

Sai Englert

On March 28, 2022, foreign ministers from Israel, the US, Egypt, Bahrain, Morocco, and the United Arab Emirates (UAE) met in Sde Boker – a place chosen for its symbolic value as the final resting place of David Ben Gurion, Israel’s first Prime Minister. The so-called Negev summit focused on economic and political cooperation, with a heavy emphasis on countering Iran’s influence in the region. 

While some participants paid lip service to the need of addressing the continued Israeli colonization of Palestine, nothing of substance was said on the matter. Instead, the participants agreed to further formalize their partnerships through a regular forum, to be hosted in turn by the different member countries. Jordan, while not present at the summit, is also among them. 

The meeting, called in haste to coincide with US Secretary of State Antony Blinken’s visit, was largely symbolic. It aimed to demonstrate the continued regional integration of the US’s closest allies in the region. This process – centered on Israel – was dramatically staged in the closing months of the Trump presidency, through several formal normalizing deals signed between Israel and the UAE, Bahrain, Morocco, and Sudan, respectively. 

Sudan’s absence from the summit illustrates both the country's ongoing internal social struggles as well as its alternative road to normalization. While the other countries’ deals with Israel represent an official acknowledgement of a much longer process of collaboration and semi-official political and economic relations, Sudan was effectively blackmailed into signing on, in exchange for the lifting of economic sanctions and its removal from the US “state-sponsors of terrorism”      list. 

Finally, while the Kingdom of Saudi Arabia (KSA) has not formally signed a normalization      agreement – presumably due to the political consequences to its position within the wider Muslim world – it also continues to maintain relations with Israel.  

Natural Gas and Regional Integration

However, while the Negev summit and increased public diplomatic relations have grabbed the headlines, less attention has been paid by reporters to the ways in which these states are giving material life to the process of normalization through trade deals, joint infrastructural projects, and transfers of personnel. Moreover, by focusing on the staged public expressions of rapprochement between the different states involved, much longer-term processes of integration are left out of view. One important commodity in this story has been natural gas, which has served as a powerful accelerator of Israel’s regional integration for several decades now. 

This process of integration has taken a number of forms since the 1979 peace treaty between Egypt and Israel – under US tutelage. The setting up of Qualified Industrial Zones (QIZs) in Egypt is one. Companies operating in these QIZs were given tax exemptions on their exports to the US, as long as they included 11.7% of imported Israeli goods in production.[1] The same approach was followed in Jordan following its peace treaty with Israel in 1994. Another more recent example is the continued collaboration between Israel and Egypt in enforcing the murderous blockade on the Gaza Strip. 

Gas, too, was central to this story of regional normalization. Egypt and Israel’s rapprochement was marked by Egypt’s export of gas – below market value – to its northern neighbor. This state of affairs continued, until the 2011 Egyptian Revolution that led to the repeated sabotage of the line, which was bombed dozens of times. While much was made of these attacks as examples of growing terrorism in the Sinai region, they highlighted the deeply unpopular nature of the gas deal and the ongoing support by Egyptians for Palestinian liberation. This same sentiment was further demonstrated by Egyptian protestors breaking the siege on Gaza and occupying the Israeli embassy in Cairo. Subsequent gas shortages in Egypt meant that exports never restarted. Instead, for a number of years now, natural gas has been flowing in the opposite direction, from Israel to Egypt. 

Beginning with the discovery of natural gas off the coast of the Gaza Strip in 1999 – its extraction was and remains blocked by Israel – gas exploration in the East Mediterranean has become increasingly important. Israel, Egypt, Turkey, Lebanon, Greece, and Cyprus have all since supported exploratory missions in their – often disputed – territorial waters. Between 2009-2013, a number of important gas fields were discovered off the coast of Israel. These currently total roughly 600 billion cubic feet (BCM) of proven reserves. By 2014, Israeli annual production had reached 7.5 BCM. Today, state revenues (royalties paid by the private companies operating the reserves) from natural gas near 1.25 billion shekels (0.38 billion USD), while production from the two largest gas fields – Leviathan and Tamar – stand at 10.81 BCM and 8.69 BCM, respectively. 

State-led Integration

Israel has focused on exporting its gas surplus (its primary use is for domestic consumption) to its neighbors. In 2016, Nobel Energy signed a $10.5 billion export deal with the Jordanian state-owned National Electric Power Company (NEPC). A year later, it signed a similar deal, alongside Delek Drilling, with Egypt’s Dolphinus Holdings worth $15 Billion. The existing pipeline, which had previously served to export Egyptian gas to Israel, was reversed to make the flow of gas from Israel to Egypt possible. Egypt’s strategy, especially following the discovery of its own reserves, such as the Zohr gas field, is to become a regional hub for natural gas liquefaction and export. 

While in theory the deals were made between companies, the respective states have been heavily involved. In Jordan, while state officials tried to hide behind the firms in charge of extracting and exporting the gas, activists highlighted the direct role of the state in facilitating the agreement with their Israeli counterparts. The largest company involved in the deal, NEPC, is state owned. In Egypt, the “private companies” involved appear to be extensions of the state. For example, as Mada Masr has shown, East Gas – the Egyptian company which co-owns the pipeline connecting the country to Israel – is majority-owned by the Egyptian General Intelligence Service (GIS). 

Earlier this year, an agreement was struck to increase gas exports from Israel to Egypt, this time passing through Jordan. The deal was once again actively opposed by the Jordanian population, which continues to reject its state’s normalization of relations with Israel, and made its continued support for Palestinian liberation heard. The state-to-state nature of this agreement was much more visible throughout the process, presumably illustrating the greater confidence of the Egyptian regime (amongst others) to publicly acknowledge its normalization of relations with Israel. 

Both pipelines, linking Israel to Egypt and Jordan, respectively, give a direct, material character to the process of regional integration. They do so not only because they connect Israel with its neighbors, but also because they integrate Israel into the wider infrastructure of the Arab Gas Pipeline. In effect, this means that Israel, through its gas exports, is also connected directly to Lebanon and Syria, as well as having the possibility to link up with other countries in the region, as and when the pipeline network is extended. 

Israeli Gas to Europe 

The question of delivering gas to Europe has repeatedly been put on the table as well. Most recently, the possibility was discussed in the context of the war in Ukraine, in order to limit the EU’s reliance on Russian gas. Such plans have been floated repeatedly and have led to the formation of the Eastern Mediterranean Gas Forum (EMGF), bringing together Jordan, Egypt, Israel, Greece, Cyprus, France, Italy, and even the Palestinian Authority – for good measure. The US, the EU, and the World Bank have observer status in the EMGF. 

However, despite the interest and fanfare surrounding it, the idea remains at best theoretical. On one hand, the amounts of available gas for export are derisory in comparison to the EU’s reliance on Russian exports. On the other hand, the proposed avenues that could connect Israel’s gas field to either Cyprus and Greece, or to Turkey, require the construction of extremely long – and costly – submarine pipelines, as well as the resolution of major maritime territorial disputes between the different actors. 

More important, perhaps, than the potential for effective export to Europe, is the further integration of Israel into regional networks, centered on its natural gas exports. Even supposed allies of the Palestinian people, such as Recep Tayyip Erdogan’s Turkey, are prepared to set aside their rhetorical opposition to Zionism in order to get a share of the pie that is East Mediterranean gas. 

United Arab Emirates

Not to be left out, the UAE has also become an increasingly active participant in the process. In December, for example, the Israeli Ministry of Energy announced the final approval of the transfer of operations, in two Israeli gas fields, from Delek Drilling to two subsidiaries of the Abu Dhabi-based company Mubadala Petroleum. The Ministry described the deal as “open[ing] a door to collaboration with companies that in the past avoided operating in Israel for geopolitical reasons.”  In addition, it claimed that Mubadala Petroleum would “open a local branch in Israel, and expand its activities in the field of energy, including in the field of renewable energy as well as in other fields of industry and innovation.”          

In fact, in the immediate aftermath of the normalization deal between the UAE and Israel, in October 2020, the US, the UAE, and Israel published a “Joint Statement on Establishing a Strategic Vision for Energy Partnership.” The statement announced a “greater coordination in the energy sector, including renewable energy, energy efficiency, oil, natural gas resources and related technologies, and water desalination technologies.”     

A first step in this process was the agreement – now blocked on the basis of ecological concerns pushed by social mobilizations – between the two countries to give Emirati tankers access to the Eilat-Ashkelon pipeline, operated by the Israeli state-owned Europe-Asia Pipeline Company (EAPC). The deal would have allowed the UAE to bypass the Suez Canal and increase both the speed and quantity of its exports to Europe. The deal was estimated to be worth between 700 and 800 million USD. The EAPC, much like the pipeline between Israel and Egypt, has a longer history of regional integration between Israel and the Gulf, under US supervision. It was originally established to facilitate the import of oil to Israel from Iran, then still under the Shah’s rule, in order to bypass the Arab boycott. 

Another, more recent, indication of the UAE’s growing activity in the region’s energy politics is the announcement of the Emirati-brokered deal between Israel and Jordan, which will see the exchange of desalinated water from Israel for solar-energy from Jordan. The solar power facility needed for the deal is to be developed by the Emirati state-owned company Masdar, and its future exports to Israel are slated to be worth $180 million dollars annually.

Finally, the Emirati influence is also felt in terms of the personnel involved in managing the East Mediterranean gas infrastructure. For example, Abdel Hamid Hamdy, the chairman and CEO of the Egyptian East Mediterranean Gas Company (Arish-Ashkelon pipeline) is a former operation manager for the Abu Dhabi National Oil Company. Mohammad Talaat Khalifa, the co-founder of Dolphinus, previously also co-founded the Egyptian subsidiary of the Royal Group, which manages UAE’s Sheikh Tahnoon Ben Zayed Al Nahyan’s private portfolio. Jamal Al Sarayrah, a former Jordanian Minister, is chairman of the Board of Directors of both the Jordan Bromine Company and the Arab Potash Company – both of which import Israeli gas. He served previously as a senior advisor to Reliance Globalcom in Dubai, and as the general manager of the Saudi ARAMCO office for Jordan, Lebanon, Syria and Turkey.

The picture that emerges is clear. East Mediterranean natural gas is serving as a lubricant for Israel’s regional integration. It connects the country politically, economically, as well as in terms of infrastructure to the rest of the region, and serves as an effective tool to deepen its normalization with its neighbors. This process, carried out under US tutelage, highlights the ways in which regional ruling classes are increasingly deepening their ties, simultaneously, with Israel and the Gulf. 

However, this picture also raises a different possibility, already demonstrated in practice in both Egypt and Jordan. The more openly the regimes across the region normalize relations with Israel and the further economic integration proceeds apace, the greater the potential grows for popular movements in those same countries to put direct pressure on both their governments as well as on Israel. The Jordanian campaign “The Enemy’s Gas is Occupation,” for example, makes the argument in practice by demanding an immediate end to the gas deals between the two countries, in solidarity with the Palestinian people and their struggle for liberation. Mobilizing against the Jordanian (or any other regional) regime and the Israeli settler-colonial project in Palestine are then two sides of one and the same struggle. 

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