Bottom Line: Israel and Turkey are flirting with the idea of building a gas pipeline from Israel’s Leviathan Basin directly to Turkey to supply European markets. For gas-starved Turkey, this is a geopolitical quagmire that involves Israel, Iran, Syria, Qatar, and Cyprus. Turkey is keeping silent on the deal, but our intelligence sources say it is seriously being considered, despite media reports to the contrary.
Analysis: In early February, Israel proposed the construction of a pipeline under the Mediterranean Sea to southern Turkey to market its gas to Western Europe. Turkish officials have conceded that the Israeli proposal has been officially made, but have responded publicly by saying that “we have a policy regarding Israel, and the claims that Turkey leans towards this idea is not true”. Behind the scenes, Israeli officials and pipeline execs have already been to Turkey to discuss the possibility of this project, which would cost around $2 billion and would involve the Turkish pipeline builder, the Zorlu Group. Israeli officials involved included Undersecretary Harel Locker and executives from the Dalek energy corporation.
Such a pipeline would be brilliant for Israel, for Turkey and especially for Europe. For Europe it means an alternative gas supply to balance out the Russian dominance of the market. For the partners in the Leviathan field, piping gas to Turkey will be much more lucrative than the other options, particularly…