The Ukraine crisis has of course economic consequences, as does any security-political crisis. The price of oil is already approaching $ 100 and will affect the rise in the price of petrol in Israel. However, there could also be particularly significant global economic consequences now that the fight has erupted. “One of the results of this crisis is reflected in the field of energy,” says Gina Cohen, an expert in the global energy market. “Western Europe and the United States say that if and when Putin does A, B – C, they will not give him permission to operate a new gas pipeline they built to bypass Ukraine, a pipeline that could flow 55 BCM of gas a year. They say to Putin: If you invade Ukraine, we will not let you use this pipeline. This is what they are saying, and there is something they are not saying: that they are afraid that Russia, because of the sanctions and threats, will stop supplying gas to Europe. I do not think Putin will stop supplying gas, certainly not to Western Europe.

He will not stop the flow, probably because Russia is very, very dependent on the gas and oil revenues it sells. But it has an effect: the fact is that Europeans are afraid. They are going around the world looking for all sorts of options and alternatives, if and when Putin should stop, even partially, the flow of gas to Europe. Now Europe is dependent on Russian gas – in Eastern Europe it can reach 80% – 90%, and in Western Europe 30% – 40% of gas from Russia. What is happening is that the US and the EU have approached all sorts of gas suppliers around the world – including the US, Qatar, Australia – and asked them: Do you have gas to supply us? Most of these gas suppliers said yes, but add that they dont have much spare to supply. “Qatar has long-term contracts with its clients, Australia is too far and too expensive to get the gas to Europe, the US can here and there and indeed sends some LNG vessels to Europe. But Russia supplies Europe something like 180 BCM a year, and that is a very large dependency.”

And how does this relate to Israel? “Europeans caused banks and all kinds of financial institutions to invest less in gas and oil, and they put pressure on big companies in this regard. Some of the gas reservoirs were sold to smaller companies, and financing was more expensive for them, because of the greater risks. It’s a vicious circle, because the Europeans said they have enough wind and solar energy, and therefore we will not invest or help or encourage the development of gas reservoirs. You have to understand: it is very difficult to store gas, it is very difficult to transport it, it is not easy to bring from one location to another – it is not like opening a tap. I was in the Knesset last week at a debate on this issue, and I heard them saying there ‘what happened in Europe, it will not happen to us’.

This is not quite correct, because the Europeans did not think it would happen to them either. They caused the companies to invest less and made banks give less money, and constantly encouraged wind and solar energy. Unfortunately, this is a process that is taking place in Israel. Energy Minister Karine Elharar said that her ministry will not deal with natural gas for a year, she has not re-opened the sea for more drilling – these are very strong signals.

It is true that the gas is here in our sea, but the companies that operate the reservoirs are foreign companies and they look and listen to the signals, when they decide whether to invest hundreds of millions of dollars. To decide whether to re-enforce the existing infrastructure? Why should Israel not indeed invest in this very good form energy in the meantime, which yields both money for the country and provides us with good geopolitical points?

Moreover, a week ago the Minister of Energy said that if there will be an emergency situation in Israel, that she received confirmation from the cabinet that she could declare an immediate state of emergency and stop gas exports. That is, it will be possible to stop exporting to Jordan, which depends on us for its electricity. Jordan depends on us, Egypt buys a lot of gas from us – and Elharar gives signals that we will not invest more in exploration and development of the whole array, and if there are problems, we will stop exporting the gas to our neighbors. It is one big mess. It can spoil things for Israel, and we certainly cannot count on Elharar to improve the situation. We have a product that is worth a lot of money, it’s much better than anything else that we have, with gas working all the time, baseload, it’s a workhorse, not like wind and sun which is one minute here and the next is not. The gas is good in so many respects and we have a lot of it. I told them in the Knesset that the committee is supposed to be the entity to promote this, and that you are doing exactly the opposite. It’s just crazy!”

Cohen’s bottom line: The situation in Israel is stable, and the storm hovering over Europe (in terms of price, highest coal consumption, energy insecurity and dangerous overdependence in Russia) is bipassing us by because now we are independent – we have our own gas. But, and this is the point: we cannot rest on our laurels, we cannot say we cannot learn from the mess that is happening in Europe, because Europe also had a lot of gas, but its erroneous policy with renewable energies led it to where it is now (for example with gas and electricity prices increasing multi-fold). In Israel, we need a government that will cultivate and continue to promote gas, while developing efficient renewable energy technologies. Thus, to conclude, the problem is that our decision makers are not doing enough to nurture and maintain what we have, and if we do not move forward, there is a risk of going backwards.

Gina Cohen
Natural Gas Expert