Leviathan: The Energy Giant that Sleeps under the Mediterranean

An aerial photograph of an oil rig at Sedco gas field, Leviathan.The Leviathan Natural Gas Field

The Leviathan is a large natural gas field located in the Eastern Mediterranean Sea.  Together with the nearby Tamar gas field, the Leviathan has been seen as an opportunity for Israel to become a major energy power in the Middle East.  This is the Leviathan – a giant gas field with the titanic potential to change Israel’s foreign relations towards a closer collaboration with Turkey and Egypt.  Good news in an uncertain energy security climate…

Off the coast of Israel, about 47 kilometres (29 miles) south-west of the Tamar gas field, the Leviathan gas field is located roughly 130 kilometres (81 miles) west of Haifa, in the 1,500 metres (4,900 ft) deep waters  of the Levantine basin – a rich hydrocarbon area in one of the world’s larger offshore gas finds of the past decade.

Cyprus, Israel and Greece have agreed to the joint extraction.

 

The Energy Triangle

In 2010, the joint establishment of the Exclusive Economic Zone (EEZ) between Cyprus and Israel, marked the beginning of an increasing collaboration between the two Mediterranean neighbours.  Both countries agreed to a joint extraction of natural gas by the American company Noble Energy in order to reduce the financial burden of extraction by both countries.

Shortly after the exchange of representatives between Israel and Cyprus, the Gaza flotilla raid occurred on 31 May 2010, thus destroying the Israeli-Turkish relations and pushing Israel towards a closer alliance with Greece.  From 2011, Greece joined Israel and Cyprus in the plan to export natural gas to Europe by 2015 through a power plant close to Limassol, on the southern coast of Cyprus.

A photograph showing the Vasilikos power station, in Cyprus.
The Vasilikos Power Station is the newest power plant of the Electricity Authority of Cyprus. Located between Larnaca and Limassol, and with an installed capacity of 640 MW, it was still under development prior to the Evangelos Florakis Naval Base explosion of 11 July 2011.  Source: Wikimedia Commons

The Energy Triangle refers to the joint natural gas extraction between Cyprus, Israel and Greece that is estimated to begin in 2015.

Officials from all three countries have agreed to the establishment of a gas pipeline from the Aphrodite gas field and the Leviathan gas field to a liquefied natural gas plant in the Vasilikos Power Station by 2019.  According to Noble Energy, the total gross unrisked deep oil potential is enough to cover the supply of natural gas to Europe for 20 years.

Besides natural gas, evidence is mounting for the existence of oil in the Levantine Basin.

 

What’s at Stake?

For decades, it seemed that most countries of the Levant, that is the east of the Mediterranean Sea, had little or no share of the Middle East’s abundant energy resources.  But in the past few years, there have been offshore discoveries of gas and possibly oil that look set to open up new economic possibilities for the region.  In future, they could also redefine strategic relationships.

A 2010 US Geological Survey report estimated that there were 122 trillion cubic feet of gas (equivalent to 3,455 billion cubic metres) and 1.7 billion barrels of oil, off the coasts of Israel, the Gaza Strip, Cyprus, Syria and Lebanon.

Several factors point to oil and gas reserves, namely, the discovery of thermogenic natural gas, working hydrocarbon systems, and the identification of at least 14 hydrocarbon plays in the Cyprus EEZ alone.

According to an article authored by Dr C. Hadjistassou, academic at the University of Nicosia, oil could be exploited within a shorter frame than natural gas, at least in the case of Cyprus.

 

A Potential Economic Turnaround for the Region

In Lebanon, the potential benefits of a domestic supply of gas are immediately clear.  Even the most well-off neighbourhoods of Beirut currently experience daily cuts of state-supplied electricity.  Power plants run on expensive imported fuel, mainly diesel.

Two maps of the Levantine Basin Energy Triangle Geology and Location.
The Geology of the Energy Triangle in the Levantine Basin

In December 2012, a seismological survey in Lebanese waters indicated vast natural gas deposits beneath the seabed, potentially as much as 25 TCF (trillion cubic feet).

Nothing is guaranteed, but the Lebanese energy minister, Gebran Bassil, is pinning his hopes on hydrocarbon revenues to turn around the country’s weak economy, which has one of the highest rates of public debt to gross domestic product (GDP) in the World.

Lebanon has named the international companies that can bid for gas and oil exploration licences.  They include giants such as ExxonMobil, Shell, Chevron and Total.  It is estimated that drilling will begin in 2015 or 2016.

The discovery will create revenues, increase the GDP and foster opportunities for investors in Lebanon.  It changes the whole picture and the whole status of the economy.  Yet that timeline still leaves the country lagging behind its neighbours.

Even Cyprus, held up by its recent financial problems, has signed deals with firms overseas to drill in its economic zone.  And in April 2013, Israel started pumping gas from its new $ 3 billion Tamar field, discovered in 2009.  Tamar has about 10 TCF of gas and could supply domestic energy needs for decades to come.

Israel has also plans to develop its huge Leviathan reserve, believed to contain 18 TCF of gas, and possibly some oil too.

 

All-Out Conflict on the Eastern Front

As each escalation of the Ukraine crisis sends a jolt of nervousness far beyond its borders, Europe worries about its energy supplies.  With about one-third of Europe’s gas supplies coming from Russia and about half of that natural gas flowing through Ukraine, these are tense times.  The most worried are the four European Union member states which get literally all of their gas from Russia.  However, another 12 European states rely heavily on Russia for more than half of their total gas supply.

Pipeline operators, energy executives and government officials have raised concerns.  At stake is the realisation that energy emerges as a potential weapon.

 

Oil is Money.  Gas is Power.

 

If Ukraine continues to stall on settling gas bills which it regards as unfairly hiked, would Russia starve it of gas?  If tougher and tougher sanctions are imposed on Russia, would President Putin retaliate by turning off the tap?  Or would it prove too costly for Russia?  After all, gas is one of Russia’s most valuable exports and western Europe enjoyed smooth flows of it even in the worst of the Cold War years when the East-West conflict was far more fundamental.

And if the conflict were to intensify  to the point where heavy weapons might conceivably be deployed, would pipelines laden with gas have to be shut down for safety?  After all, Ukraine is the World’s largest transit country for gas supplies.

 

How will Europe wean itself off Russian gas?

Many in the field cast an anxious eye ahead of the danger of gas stocks running low this winter.  So why won’t Western countries immediately try to wean themselves off Russian natural gas?

For Ukraine, the quickest option is to buy gas from western suppliers rather than from Russia, and several pipelines have been modified for so-called “reverse flows”.  Gas owned by German energy giant RWE is currently being sold to Ukraine via pipelines running through Poland and Hungary, and Slovakia agreed to join this trade.  However, it is thought that the quantities involved could never match Ukraine’s needs.

An aerial photograph showing LNG Terminal at Klaipeda on the Baltic coast of Lithuania.
LNG Terminal at Klaipeda (Lithuania) on the Baltic Coast

As one of the four countries entirely dependent on Russian gas, Lithuania was prompted by a series of price rises and political uncertainties to decide, back in 2010, to create a new pathway for gas.  The unfolding events in Ukraine only added to the urgency.

The hope for many countries is to open up to new sources of natural gas, especially liquefied natural gas (LNG), deliverable by ship. 

Lithuania is rushing to build an LNG terminal at the port of Klaipeda on the Baltic coast which would allow it to receive gas from anywhere in the World.

A photograph showing Independence - the World's first LNG Vessel constructed by Hyundai.
Built by Hyundai in South Korea and commissioned by Lithuania, the Independence is the very first LNG floating storage and re-gasification unit ship in the World.

To speed up the process, the equipment designed to turn the LNG into gas has been installed on a specially-constructed ship, named Independence, being built in South Korea and due to be delivered in November 2014.  To meet a deadline of achieving the first delivery before the end of the year, work on the terminal is going on around the clock, the size of the workforce has been trebled and Lithuania’s president regards the project as a national priority.

The LNG option is also being considered by Poland, Estonia and Ukraine.  However, LNG is bought and sold on a global market, and shipments from places like Trinidad or Qatar are open for competition.  When Japan closed its nuclear power stations after the Fukushima disaster in 2011, prices rocketed up.  Although switching from Russian gas to LNG may bring a greater sense of security to those European countries, the process will come at a higher cost.

Expectations are also high that the United States will soon add its shale gas to the global market in the form of LNG, but not before next year at the earliest when the first export terminal opens in Louisiana.  Other terminals will not be ready until later in the decade.

A longer-term option for Europe is to develop more gas supplies of its own, and another is to develop shale gas extraction in the hope of copying America’s shale gas revolution.  Norway, Britain and the Netherlands are all long-standing producers who may try to achieve this, but flow rates are unlikely to be increased by much.  And several European countries have already come out against fracking because of fears about its environmental impact.

Basically, each idea has its drawbacks or it involves delays or added costs.  And the worse the situation in Ukraine, the greater the chance of energy becoming a target for sanctions or a means of reprisals against sanctions.

Progress is slow…

 

The Game Changer?

A map showing gas reserves in the Eastern Mediterranean. Source: US Geological SurveyFor now, it is the Palestinians and the Syrians who are the least able to take advantage of the offshore gas that lies under their waters.

In Syria, the ongoing civil war currently makes further energy exploration impossible.  Until recently, the country – a minor oil producer – was unable to export oil from its existing fields in the north and east of the country because of the Western embargo.

However, the European Union lifted its sanctions last year to provide more economic support for the rebels fighting against President Bashar al-Assad’s forces.

Further south down the coastline of the Levant Basin, the Gaza Marine field, 30 kilometres off the coast of the Palestinian territory, has long been known about.  In 1999, the Palestinian Authority awarded the exploration licence to British Gas.  Unfortunately, the ongoing conflict between Israel and the Palestinians has prevented further development of the field.

There is even further political uncertainty and much insecurity in our World at the moment.  The sustainable and collaborative exploitation of the Leviathan, Tamar, Aphrodite and Dalit gas fields in the Eastern Mediterranean has the potential to turn around the fortunes of many in the Middle East.  And extending its economic benefit further out West, it could simply be the game changer towards alternative natural gas sources that Europe has been waiting for…

 

A Biblical illustration showing the Trumpet of Revelation, God's Mountain of Fire, and the Leviathan sea monster.

Will traders barter for him? Will they divide him up among the merchants?  His snorting throws out flashes of light; his eyes are like the rays of dawn.  Firebrands stream from his mouth; sparks of fire shoot out.  Smoke pours from his nostrils as from a boiling pot over a fire of reeds.  His breath sets coals ablaze, and flames dart from his mouth.  His chest is hard as rock, hard as a lower millstone.  He makes the depths churn like a boiling cauldron.  Behind him he leaves a glistening wake…

 Job 41:1-34