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Another Oil War?

Is the US Playing With Gas in Syria?

by EVAN TAYLOR

Istanbul is rioting, Syria is enflamed, and the Palestinians still do not have a state, but it may be that the real catalyst for action in the Mediterranean is coming from miles under the sea.  Based on discoveries made in the last five years, Israel, Cyprus, and other states in the region are now flush in natural gas, and enamored by the possibility of finding more.  A new energy bonanza is taking place, with a new game of pipeline politics quick on its heels, and disturbingly, strange and horrific wars as well.

While this bonanza has been slowly growing for near a decade, it was only earlier this year that the gas really began to flow.  On March 31st, Israel’s supergiant Tamar natural gas field came on line, delivering its inaugural shipments via a 150 kilometer undersea pipeline to a power station in Ashdod, just south of Tel Aviv.  Tamar, thought to contain as much as 9 trillion cubic feet of natural gas, was the world’s largest gas discovery in 2009.  And if predictions are to be believed, the flow will not stop, for decades and possibly centuries. For Tamar is the smaller of two fields discovered in Israeli waters by the Houston-based Noble Energy and their Israeli partner Delek.  The larger field, which they have given the monstrous title of Leviathan, is potentially double the size of Tamar, and is expected to come on line within four years.  Boasting the results of a seismic study of Leviathan in June 2010, Delek boss Yitzhak Tshuva declared “today is a day of celebration for all of us,” as “the State of Israel is now an energy independent country,” with “more than 100 years of reserves at Leviathan.”  Tshuva pegged their gas holdings at the time at 30 trillion cubic feet, and the CEO of Delek Group, Asaf Bartfield, stated that Israel “may now be able to supply the European Market and the Far East.”

Just this May, Noble and Delek announced that they had hit gas in another well, their seventh straight discovery, and upped their estimated holdings to 38 tcf.  Studies indicate, however, that this could be only a third of the potential offshore gas deposits in the region.  A detailed seismic report prepared for the Israeli Ministry of Infrastructure in April of 2008, prior to Noble and Delek’s supergiant discoveries, states that “a high potential for hydrocarbon accumulation” exists in the basin.  That October, one month before Noble drilled their first exploratory well at Tamar, James Peck, President of Deep Seek Exploration Experts, released findings based on ten years of seismic analysis of the region. Published in Oil and Gas Journal, Peck wrote that “exceptionally large” structural traps “have been mapped within drillable depths,” creating the potential for “giant-to-supergiant accumulations of oil.”  In May of 2010, the U.S. Geological Service, part of the Department of the Interior, affirmed these results.  They predicted that the Levant Basin Province, located between Israel, Lebanon, Syria, and Cyprus, contains 122 tcf of natural gas and 1.7 billion barrels of oil.  The Nile Basin, north of Egypt, was thought to contain even more.  Such numbers showed the Eastern Mediterranean as holding “world-class potential for undiscovered natural gas resources” as Brenda Peirce, the USGS Energy Resources Program Coordinator put it.  “Israel was the land of milk and honey in Biblical times,” stated Charles Davidson, the CEO of Noble Energy, in his 2010 press conference announcing the Leviathan field, “but in the modern era, its milk and honey and natural gas.  In Israel’s deep waters, in virgin territory, a monster natural gas discovery has been made.”

***

Although neither Noble nor Delek is well known in the U.S., over the last decade they have together managed to become the controlling players in the new energy bonanza.  Delek, run by billionaire Yitzhak Tshuva, is one of the largest companies in Israel.  Besides partnering with Noble in offshore drilling operations, Delek also operates the world’s largest reverse osmosis desalination plant, a chain of gas stations, and multiple power stations.  Tshuva, born in Libya in 1948 and raised with his seven siblings in a one-room apartment north of Tel Aviv, rose to prominence a self-made man.  He started working as a laborer at age 12, never went to college, and after serving in the army, moved up the ranks of the military construction industry, then branching out into commercial real estate.

By 1998, Tshuva had acquired a controlling stake in Delek, already a top Israeli firm in auto imports and gasoline.  Tshuva took what had been founded as a state owned gas-station chain and expanded it into a $10 billion holding company, with major international interests in energy exploration, gas stations, and real estate.  In September of 1998, Delek, through its subsidiaries Avner Oil and Delek Drilling, entered into a partnership with the Houston based Noble Energy to explore for energy offshore, what they called the Yam Tethys consortium.  Noble, then operating through its subsidiary Samedan Mediterranean, controlled just under 50% of the company, and the Delek companies the rest.  The group hit pay dirt within two years at the Mari-B and Noa wells.  After drilling down 6,800 feet into the seabed, they estimated that there could be as much as 1.5 tcf of gas just 15 miles from the Israeli coast.  At the same time British Gas discovered two gas deposits of the same size just to the south, in Palestinian waters offshore of Gaza.  The Mari-B field, the only one clearly in Israeli waters, was brought on line in February 2004, delivering gas to the Israeli Electrical Corporation.  However, Mari-B will soon be depleted, and with shipments starting from Tamar, it is being shut down.

Tshuva also greatly expanded Delek’s investments in the U.S, both in energy, through Delek US and real estate, through his Elad group.  In 2004, he acquired a controlling stake in the century-old Plaza Hotel overlooking New York City’s Central Park, and proceeded to gut 500 of the hotel rooms in order to build 182 luxury apartments.  According to the New York Times, these condos, some costing as much as $50 million, are all owned, but near permanently empty—bought by the international uber-rich, no doubt already owners of multiple residencies around the world. The Times shone light on the plight of one “lonely princess” who has “no idea who lives on either side of her; of the 10 apartments on her floor, she knows not a soul, not a face, not a name.”  Last August, Tshuva sold his stake in the Plaza to an Indian conglomerate, making a $920 million profit off the deal.

But Tshuva’s largest real estate project in the U.S., a Las Vegas casino, has not been so successful.  In 2007, he partnered with another Israeli billionaire, Nochi Danker, to buy the Frontier hotel in Las Vegas.  In a gaudy, fireworks heavy celebration, the two demolished the second oldest casino on the Las Vegas strip, planning to construct a Plaza Las Vegas in its place.  But the 2008 financial crisis soon hit, construction never got off the ground, and the property is still an empty lot to this day.  Delek US is also a Pentagon contractor.  Since 2000, subsidiary company Delek refining, based in Tyler Texas, has held an annual contract with the Defense Logistics Agency to supply jet fuel to the U.S. military, at an average cost of $50 million a year.  In both 2008 and 2009, they were awarded over $100 million in fuel contracts.

Noble Energy, Delek’s exploration partner, is in contrast a less showy outfit.  The company, in operation since 1932, is a major driller for energy in the U.S., with tenders for gas in Pennsylvania’s Marcellus Shale region, the D.J. Basin in Colorado, and Northern Nevada.  They are heavy proponents of the controversial hydraulic fracturing drilling method known as fracking.  Noble has also worked in the Gulf of Mexico since 1968, and were recently the first company allowed to resume drilling after the Deepwater Horizon oil spill disaster.  Internationally, Noble has held acreage in both the West African state of Equatorial Guinea and China since the 1990s, and began operating last year in Sierra Leone and the Falklands Islands.  But it is their concessions in the Eastern Mediterranean that are the jewels in their crown.  According to a company report filed with the S.E.C. in 2012, Noble’s proved reserves in Israel alone make up more than half of their international holdings and a third of their total holdings, although they have only developed a tenth of their Israeli acreage.

In January 2009, Noble CEO Charles Davidson was quoted in the Houston Chronicle calling the Tamar find “one of the most significant prospects we have ever tested,” with initial estimates of the reserve at 3.1 tcf. But this number was to grow as Noble kept drilling more wells and surveying more sea.  In a move that must now have heads spinning in London, Noble had acquired the rights to the Tamar concession from British Gas in 2006 for a single dollar.  Within a month, Noble upped the Tamar estimate to 5 tcf, and then again in July, to 6.3 tcf.  Tamar would end up being the largest gas discovery in the world that year.  Already, however, Noble’s eyes were turned to even bigger possibilities to the west of Tamar, what would be the Leviathan field. Between December 15th, 2008 and March 1st, 2009, Noble acquired exploration licenses for 20 concessions offshore of Israel, totaling nearly 5,700 square kilometers. “I think the other thing that’s really exciting is you haven’t heard of a land rush in Israel,” Davidson bragged on a conference call with analysts later that year, “because we tied up the acreage before we ever drilled the Tamar prospect. So we and our partners have 3 million acres across the basin between both Israel and Cyprus.”

Noble, while not near the stature of American behemoths like Exxon and Chevron, certainly has the ear of U.S. officials in Washington.  According to data gather by the Center of Responsive Politics, Noble has increased their political contributions from $4,500 in 2004 to $317,000 in 2012, spread around various Congressmen in oil and gas states.  And although they are not adverse to donating to the occasional Democrat in Pennsylvania and Louisiana, their donations heavily favor Republicans.  Noble has also raised their lobbying presence in the capitol, spending over a million dollars a year since 2010 to get the ear of U.S. officials.

The investment has paid off.  When Israel upped their energy tax in 2010, Noble enlisted none other than Bill Clinton, the former U.S. President and husband of the sitting Secretary of State, to lobby the Israeli government on Noble’s behalf. The Wall Street Journal reported that Clinton “raised the issue in a private meeting with Israeli Prime Minister Benjamin Netanyahu in New York in July, according to a Clinton aide. ‘Your country can’t just tax a U.S. business retroactively because they feel like it,’ the aide said Mr. Clinton told Mr. Netanyahu.”  In an interview with the Israeli business paper Globes on the same issue, David Wurmser explained “I have no doubt that Noble Energy will recruit legislators, especially from Texas, where it has its headquarters, to promote its interests and to exert pressure on Israel. These are the rules of the game. Noble Energy has ties in Washington, and it knows how to play.”

Wurmser is himself a past consultant with Noble, through his Delphi Global Analysis Group.  He has become a bullhorn for the development of Israel’s gas prospects, giving frequent quotes to reporters, penning op-eds in the Wall Street Journal, and just this past April publishing a 12,000 word report on “The Geopolitics of Israel’s Offshore Gas reserves.”   Wurmser is a name that should ring alarm bells for those who remember the George W. Bush administration.  A longtime neoconservative advisor to both U.S. and Israeli governments, he served as a coauthor on the infamous “Clean Break” study released in 1996, advocating that Israel “shape its strategic environment, in cooperation with Turkey and Jordan, by weakening, containing, and even rolling back Syria.  This effort can focus on removing Saddam Hussein from power in Iraq.” Wurmser then worked to turn his plan into reality. He helped to establish the Pentagon’s Office of Special Plans, the Orwellian named office that manipulated the evidence and bureaucratic process in the lead up to the 2003 invasion of Iraq, and then was briefly an assistant to John Bolton in the State Department, working to shore up support for the war at Foggy Bottom.  From 2003 to 2007, Wurmser served as Dick Cheney’s top Middle East advisor, where he was regarded as an ultra-hawk who pushed for regime change in Iran and Syria.

Delphi, founded by Wurmser shortly after he left the Vice Presidents office, gets the Iraq gang back together.  Its staff of six includes Wurmser’s former boss Bolton, as well as his wife, Meyrav Wurmser, the founder of the Middle East Media Research Institute.   Billing itself as an oracle of “geopolitical risk analysis,” Delphi is concerned exclusively with Israeli issues, and since December of 2010 has been selling their advice on the Levant Basin gas prospects.  And it may be that Noble’s connections to the American far right foreign policy circles do not end there.  In 2003, when Israel’s Ministry of Infrastructure was delaying their operations, Noble’s international operations manager, Rodney D. Cook told the Israel Minister of Infrastructure that his actions were “ liable to seriously damage US-Israel relations. If necessary, we’ll involve Vice President Richard Cheney, who is very interested in promoting the project.”

***

Israel is not alone in this new bonanza.  The Noble-Delek partnership has discovered another supergiant natural gas field offshore of Cyprus, nearby to the Leviathan find, and there is large industry agreement that Greek waters are also energy rich.  This past spring, Lebanon sold the license to offshore energy concessions, and 52 companies put up bids, including Chevron and Exxon Mobil.  Analysts are also raising the possibility of discoveries offshore of Syria, where significant onshore natural gas fields already exist.  British Gas is once again discussing the long dormant Gaza fields for development.

Sitting squarely in the middle on this new monstrous mix of gas, politics, and money is Turkey, the booming land bridge at the cross of Eurasia. With a growing industrial economy and a high-tech transportation base, Turkey is the most logical option as a steady and reliable customer for Israeli gas, as well as a hub for continent-spanning pipeline networks for further export.  Madeline Albright, speaking last year at the release of a blue ribbon Council of Foreign Relations report on Turkey she chaired with former National Security Advisor Steven Hadley, described Turkey as “sitting in a geographically amazing place, in terms of various connections of pipelines, discoveries of new fossil fuel.”

But Turkish-Israeli relations have cooled as of late.  Since the death of nine Turkish citizens in the May 2010 Israeli raid on the Mavi Marmara aid ship to Gaza, Turkey has not maintained diplomatic relations with Israel, on the conditions that Israel needs to apologize for the loss of life, provide payment to the families of the deceased, and lift the blockade on Gaza. Solving this problem has become a priority for Obama administration. One week prior to Tamar coming on line, Obama was in Israel with his new Secretary of State, John Kerry, where they pushed for Israel and Turkey to mend ties.  As the Guardian newspaper reported, it took until the very last moments before the U.S. President left for Jordan for the Likud leader to get on the phone with Turkey and apologize for loss of life.  Speaking from a trailer on the airport tarmac, Netanyahu, under Obama’s no doubt stern glare, told the Turkish prime minister that “several operational errors” had led to loss of life, a fact he regretted, and hoped that normal diplomacy could once again begin. The phoned in apology had checked off Ankara’s first condition, and reports indicated that the issue of blood money was being settled as well, but freedom for Gaza went unmentioned.

However, this was no stand in the name of human rights, but an oil deal.  Multiple reports have indicated that a large Turkish conglomerate, the Zorlu group, has been in talks since at least February of this year to build a pipeline from the Israeli gas fields to Turkey, capable of transporting as much as 10 billion cubic meters per day. Zorlu, one of the largest companies in Turkey, has interests in such power-heavy industries as textiles, electronics, and real estate, and already has a billion dollar stake in the Israeli economy.  They are partners in multiple Israeli power plants, including the Dorad station in Ashkelon.  Zorlu has military connections as well, last month signing a deal with the Turkish army to sell six of the drone aircraft they have started manufacturing.  And the pipeline seems to have official backing, as according to an article in Globes, “the signals from Turkey … come from top government officials, although President Recep Tayyip Erdogan has been silent on the issue.”

A pipeline to Turkey, although a logical route for Israeli gas, is not the only option for export.  Also being pushed is a Liquefied Natural Gas (LNG) plant, to process for tanker transport to Asia.  Just this month, Delek and Noble signed preliminary agreement to build a LNG facility on Cyprus, and in December of last year the Australian firm Woodside, specializing in LNG, bought a 30% stake in the Leviathan field, although the deal has not been completed.  But constructing a LNG facility is a pricy and lengthy affair compared to a pipeline.  LNG also lacks the geopolitical cache of a new pipeline—“a diplomatic instrument that could have a dramatic effect on our standing in the region,” as it was put by Israeli government sources quoted in Globes. But crafting such a diplomatic instrument would be quite a feat, with myriad potential conflicts to affect the deal. There is the disputed sea boundary of Israel and Lebanon, the decades-long division of Cyprus, and the ongoing issue of the Palestinian population imprisoned in Gaza.  Throw in Russia’s only Mediterranean Naval base at the Syrian port or Tartus, and it is clear that any trans-Mediterranean pipeline would snake through treacherous waters.

But this is what the Obama administration seems to be aiming for, a grand rekindling of the Clinton Administration’s tripartite alliance of the U.S., Turkey, and Israel, with Israel’s natural gas wealth serving as a backbone to the deal.  A key figure driving White House policy on this issue is Richard Morningstar, a Washington operator on energy issues since the Clinton Administration, and currently the Ambassador to Azerbaijan.  Prior to being appointed Ambassador in 2012, Morningstar was the State Department’s Special Envoy for Eurasian Energy, where he led efforts to develop what the Obama Administration is calling the “Southern Corridor.”  Not a new idea, these are geopolitical pipeline and military networks from Central Asia and the Persian Gulf to Europe, and Morningstar has been pursuing them for over a decade now.  His pet project was the Baku-Tbilisi-Ceyhan pipeline, in operation since 2006, which runs from Azerbaijan’s Caspian capital through Georgia to Ceyhan, a Turkish port less than 50 miles from the Syrian border.  In his book The Oil and The Glory, journalist Steve Levine recounts the negotiation that Morningstar led on the pipeline in 1998:

Washington, in short, had adopted a variant of Henry Ford’s dictum that any customer could have a car painted any color that he wanted, so long as it was black.  The oilmen could build any pipeline they desired, so long as it ran from Baku to Ceyhan without touching either Iran or Russia.  In a way, the oil companies were right—this had evolved from U.S. policy into an obsession.” (351)

While details about the proposed Israeli-Turkish pipeline have not been released, the closest Turkish destination would be Ceyhan.  Morningstar may want to add more spokes to his energy hub.  Speaking at a March 2012 conference in Athens sponsored by the Economist, he stated that there were “multiple pots of gold” in the Eastern Mediterranean, and that “there will ultimately be large amounts of gas to ship through Azerbaijan, Georgia, and Turkey to Europe.”

Another key U.S. operative is Mathew Bryza, Morningstar’s former deputy in the Clinton Administration, who served in the George W. Bush administration both in the National Security Council and State Department.  Bryza was actually Obama’s first choice as ambassador to Azerbaijan, but was never confirmed by the Senate, under lobbying pressure from Armenian activists.  Obama decided to shove him through anyways, and from late 2010 through 2011, Bryza sat in oil soaked Baku as the U.S.’s unconfirmed Ambassador, and was then replaced by his former boss.  After leaving the State Department, Bryza then drew controversy by joining the board of a Turkish gas company, Turcas Petrol, which has many connections with Azerbaijan’s state-run oil company, SOCAR.  This April, SOCAR was awarded a contract by the Turkish government to explore for oil and gas in Turkish waters.  Although most American’s would have trouble locating Azerbaijan on the map, ever since the country was freed from the Soviet Union it has been an important node in U.S. Central Asian policy, as well as a key ally to Israel.

The U.S. attempted to build this alliance once before in the 1990s, when Israel and Turkey signed far reaching economic and military deals, and worked with Washington to attempt to militarize the then newly discovered energy fields in the Caspian and expand NATO’s reach all the way to China.  This resulted in multiple oil wars in Afghanistan and Iraq, of which neither Turkey nor Israel participated in.  These are part of the Long War for control of what Asia Times correspondent Pepe Escobar calls Pipelineistan, a region wide set of corridors from the greater Middle East both west to Europe and east to Asia.  The U.S. still has 65,000 troops and 110,000 contractors in Afghanistan, as well as a giant military base and transport network stretching through Eastern Europe and Central Asia.  The Persian Gulf, through which one third of the world’s petroleum tankers pass through daily, is a second home to the Pentagon’s Central Command.  But while the militarization may have been successful, control of the oil has been tenuous at best.

Is the Eastern Mediterranean a new cockpit for conflict in this Long War?  Since the start of this bonanza, NATO has toppled Libya, Syria is enflamed in civil war, and the longtime ruler of Egypt has fallen.  Last year, Haaretz wrote that the Israeli Defense Force was quickly becoming the “Israeli Gas Defense Force,” and that was before the Netanyahu government asked for a budget increase of $800 million dollars to create a Naval task force to patrol the gas fields. This past May, Israel brazenly flew bombing runs over Damascus. President Obama also just promoted the hawkish Susan Rice and Samantha Power, both strong advocates of so called “humanitarian intervention,” and accordingly declared that the U.S. would finally begin giving overt military aid to the forces combatting the Assad government, upping the covert assistance they have provided for the last two years.  It appears that Damascus will soon finally feel the full impact of the Western fist.  Turkey and Israel will be key partners in this effort.  Gas may be the reason why.

Evan Taylor is a student at American University.  He can be reached at egtayl (at) gmail.com