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Israel, US Agree to Enhance Energy-related Cooperation
US Energy Secretary Rick Perry speaks to the media in Jerusalem on July 22. (David Rawlings)

Israel, US Agree to Enhance Energy-related Cooperation

Secretary of Energy Rick Perry reinforces close bilateral ties on trip to Jewish state

US Secretary of Energy Rick Perry, who is making his first official visit to Israel since his appointment, reaffirmed Monday at a press conference in Jerusalem the importance and benefits of the countries’ close bilateral relationship.

“Under the leadership of President Donald Trump and Prime Minister Binyamin Netanyahu, the ties between the US and Israel have reached new heights. This is built on [common values] and a foundation of strong economic and security cooperation,” Perry told The Media Line and others.

Earlier in the day, Perry met with his Israeli counterpart, Dr. Yuval Steinitz, after which the two reiterated their commitment to “advancing the high level of strategic cooperation” in matters related to “energy security through cybersecurity, information sharing and training,” as well as “opening markets and enhancing investment in the development of Eastern Mediterranean gas.”

Perry arrived in Israel on Sunday and toured the Old City of Jerusalem with Steinitz before paying tribute at the Yad Vashem Holocaust memorial to those murdered by the Nazis during World War II.

The US cabinet member is in the Middle East to discuss various issues in accordance with the mission of the prospective US-Israel Center of Excellence in Energy, Engineering and Water Technology, a project that was green-lighted last year. Its goal, according to a statement issued at the time, is to “accelerate development and more rapid deployment of critical and innovative technologies for fossil energy, energy cybersecurity in critical infrastructure, the energy-water nexus, energy storage, and other areas of energy that are needed to diversify supply and promote higher efficiency.”

Washington and Jerusalem similarly cooperate through “BIRD Energy,” the manifestation of a bilateral agreement signed in the 1970s. The foundation aims to “generate mutually beneficial [dealings] between US and Israeli companies, including start-ups and established organizations.”

To this end, BIRD provides funding covering 50 percent of development costs – up to a maximum of $1 million – for approved joint US-Israeli projects. The organization does not acquire equity in these companies, which qualify for various energy-related programs in fields ranging from agriculture, communications and electronics to life sciences and renewable or alternative technologies.

Meanwhile, Perry is also slated – along with Steinitz – to travel to Cairo, where he will represent the Trump Administration at the Eastern Mediterranean Gas Forum.

The summit is geared toward developing a regional natural gas market following huge discoveries, particularly off the coasts of Israel and Egypt. Other countries partaking in the event include Jordan, Greece, Cyprus and Italy. Palestinian Authority officials have also been invited.

The meeting comes ahead of expected approval later this year on the construction of a $7-billion, 1,200-mile underwater pipeline sending Israeli gas to Athens, Nicosia and Rome.

Perry’s trip also comes against the backdrop of heightened tensions between the US and Iran. Tehran recently announced it had violated the 2015 multilateral nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA) – from which President Donald Trump withdrew in mid-2018 – by enriching uranium to 4.5 percent purity, hinting broadly that it could next aim for 20%. This would vastly shorten the time needed for the Islamic Republic to produce the 90%-enriched uranium required for a nuclear bomb.

Israeli Prime Minister Binyamin Netanyahu has been one of the most vocal opponents of the JCPOA, and last week suggested that European parties to the accord – Britain, France and Germany – were liable to ignore the Iranian threat until such time that the ayatollahs nuke the continent.

Dr. Alex Coman, a Value Creation Expert at the Interdisciplinary Center Herzliya’s Adelson School of Entrepreneurship, agrees that Iran’s transgression concerning the nuclear pact is something Washington and Jerusalem are keeping a very close eye on and, furthermore, trying to create a united front with regional Sunni nations to prevent the Islamic Republic’s potential nuclearization.

“Iran’s uranium [program] will be a pivotal issue [moving forward], as well as [upholding] the US-implemented embargo on the export of Iranian oil,” Coman told The Media Line.

Indeed, the Trump Administration in May ended a waivers program that had allowed eight countries to continue purchasing Iranian crude. Since then, analysts estimate that Tehran’s exports have dropped from about 1 million barrels per day (bpd) to under 500,000. When President Trump pulled out of the nuclear deal, Iran was exporting some 2.5 million bpd.

Coman also emphasized the “tight coordination” between Israel and the US in the cybersecurity realm, given the former’s “leadership position” in the industry. Despite its miniscule size, the Jewish state receives approximately 20% of venture-backed cyber investments worldwide, exceeding the $1-billion-dollar-mark for the first time last year.

Concurrently, Washington has blamed Tehran for numerous recent attacks on ships in the Gulf, the latest incident being last Friday’s impounding of a British-flagged tanker that had been transiting the Strait of Hormuz – through which some 30% of the global oil supply passes. The White House has also accused Iran of ordering its proxies to target US interests in Iraq as well as critical infrastructure, including civilian airports, in Saudi Arabia.

Indeed, Riyadh is likely be to another critical topic for Israel, as the White House reportedly is in talks to share nuclear technology with the Sunni Muslim kingdom and build reactors throughout the country. In response, Democratic lawmakers earlier this year launched an investigation into whether the alleged initiative would violate American laws barring the transfer of sensitive technologies.

While the House of Saud maintains that it wants to diversify its oil-dependent energy sector, King Salman has made clear that his nation would take steps to match the nuclear capabilities of its arch-foe, Shi’ite Iran. Analysts warn that this could spark a regional arms race, with countries like Turkey and Egypt already moving to obtain nuclear know-how.

Nevertheless, Perry is believed to be a strong proponent of the move, its advocates claiming that it would act as a counterbalance to Tehran’s nuclear ambitions and regional military interventions.

“I will provide the same assurances regarding the Saudi initiative to Prime Minister Netanyahu during our meeting [Tuesday],” Perry told The Media Line. “Namely, that any nuclear partnership would require a 123 Agreement [in accordance with the United States Atomic Energy Act of 1954], which includes a prohibition on the development of nuclear weapons. The US needs to be involved in any civilian atomic program because of its commitment, unlike the Chinese and the Russians, to non-proliferation.”

Regarding Israel, the Jewish state stands to become a major player in the global energy industry. In fact, Perry also toured the Israeli headquarters of Texas-based Noble Energy, which was instrumental in developing Israel’s natural gas industry.

While the Israeli energy revolution traces back to the late 1990s, the first major breakthrough came in 2009, when Noble discovered the Tamar field, which began servicing Israel four years later. At the time, Tamar’s reserves, totaling some 320 billion cubic meters (11 trillion cubic feet), represented the largest natural gas find in the Levant basin of the Mediterranean.

Less than two years later, Noble announced an even larger finding, namely, the Leviathan field, which contains an estimated 620 billion cubic meters (22 trillion cubic feet) of natural gas.

The first of numerous massive barges transporting the Leviathan platform to Israel earlier this month departed from the Gulf of Mexico ahead of their scheduled installation in September. After making their 7,200-mile journey, Noble intends to launch the flow of gas to the Israeli mainland by the end of the year, and then to other markets.

In this respect, Noble in 2014 signed its first cross-border deal to supply Jordan with $500 million in gas from Tamar; the resource started flowing to the Jordanian side of the Dead Sea in January 2017. In September 2016, the company and its partners forged a follow-on 15-year, $10-billion accord with the Jordan National Electric Power Company for 45 billion cubic meters (1.6 trillion cubic feet) of natural gas, mainly from the Leviathan field.

Perhaps Noble’s biggest achievement is the $15 billion agreement signed in February 2018 to supply the Egyptian consortium Dolphinus with 64 billion cubic meters (2.6 trillion cubic feet) of natural gas over a decade.

Perry emphasized that natural gas could be a conduit to forging partnerships between regional states, which, as a corollary, would improve security and thus the stability of the Middle East.

In this respect, the Interdisciplinary Center Herzliya’s Coman suggested that “energy diplomacy” contributed to Israel’s recent decision to effectively turn a blind eye to Cairo’s acquisition of advanced submarines from Germany.

Overall, Israel’s Central Bank forecasts that the state will generate almost $20 billion in taxes and royalties from the Tamar and Leviathan fields over their lifespans, in addition to ancillary savings associated with shifting from the consumption of more expensive fossil fuels to natural gas.

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